Australian anti-bribery laws. Implications for Australian business and foreign investment.

Presented by David Tonkin

Chief Legal Counsel, Austrade

CONTEXT:PERCEPTIONS OF BUSINESS PRACTICES IN ASIA PACIFIC

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32% Do not conduct any audits or reviews on their third

parties

25%Do not have confidence in

their organisation to protect whistleblowers

32% Believe it is justified to offer cash payments to

win and retain business

85% Want their organisation’s

anti-bribery and anti-corruption (ABAC) policies

to be simplified and localised

Source: EY ‘How should over-burdened compliance functions respond?’, APAC Fraud Survey 2017’

› International obligations:

– OECD Anti-Bribery Convention

– UN Convention against Corruption

› Domestic laws enacted in 1999:

– Foreign bribery offences under s.70 Criminal Code Act 1995:

– Applies in/outside Australia to Australians & Australian companies

AUSTRALIA’S EXTRA-TERRITORIAL ANTI-BRIBERY LAWS

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Providing, offering or arranging a

benefit

The benefit is not legitimately due

With an intention to influence a

Foreign Public Official in their official duties

With the motive to gain or retain

business or a business

advantage

› AWB made significant payments to the Iraq government, allegedly in contravention of international law (UN Wheat-for-oil program).

› No criminal proceedings brought because anti-bribery laws were inadequate

› Civil proceedings brought against AWB executives were unsuccessful.

Securency International Pty Ltd 2011 -2018

› First anti-bribery, criminal prosecuted in Australia.

› Charged with bribing foreign government officials to secure polymer bank note.

› Former executives were also charged.

› 8 years later, trials abandoned.

Lack of detection or reliable evidence fails to get convictions. Laws and methods to change

AUSTRALIA’S HAS HAD LIMITED SUCCESS IN PROSECUTINGANTI-BRIBERY CASES

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Australian Wheat Board (AWB) 2007 - 2018

• Vietnam’s Anti-Corruption Law 55/205 is amongst the best anti-corruption legal frameworks in Asia but implementation is difficult

• Laws in Vietnam criminalises:

– Taking, offering and brokerage of bribes (article 3)

– Advantaging upon the exchange of a bribe (article 40)

› The new (2018) Penal Code No 100/2015/QH13 establishes anti-corruption legislation and sanctions for:

– Receiving or giving bribes

– Acting as an intermediary for bribes

– Public official or not

Penalties

life imprisonment or capital punishment, significant fines, confiscation of property.

ANTI-BRIBERY LAW IN VIETNAM

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PUBLIC PERCEPTION OF CORRUPTION IN VIETNAM

PERCEPTIONS IN VIETNAM

6Presentation Title

Ranked 171 out of 180 countries on Transparency International’s Corruptions Perception Index 2018.

• Scored 33/100 (0 = highly corrupt 100 = very clean).

• Fell 10 places compared to 2017 when it scored 35 points.

2018 Mekong Development Research Institute survey

showed corruption (16 %) was the third leading concern of the respondents, after employment (24%) and air pollution (17%).

Over two thirds of respondents believe that corruption will fall in

the next five years due to the country’s anti-corruption

crackdown.

VIETNAM’S FIGHT AGAINST CORRUPTION

In January 2018 Đinh La Thăng, former Minister for Transport and Communist Party Secretary became the first top Party official in several decades to be tried and sentenced to prison for corruption.

In February 2019, two former communications ministers were arrested for “violation of regulations on the management and use of public capital causing serious consequences” over their alleged roles overseeing the proposed purchase of a loss-making TV firm which would have resulted in a loss of over $300m in state funds.

In December 2018 the Vietnamese Government’s Ministry of Public Security launched a hotline for the reporting of alleged police corruption.

VIETNAM’S FIGHT AGAINST CORRUPTION

7Presentation Title

COMPARISON OF AUSTRALIA, VIETNAM AND CHINA LEGISLATION

AustraliaCriminal Code Act

VietnamAnti-corruption Law and Penal

Code

ChinaPRC Anti-Unfair Competition

Law

PRC Criminal Law

Intention The offence applies

regardless of intent to

bribe the FPO.

Intended to “knowingly”

influence the FPO – irrelevant

if conduct culturally

acceptable

Some offences require intent,

but some do not

Benefit Can be any advantage,

not limited to property or

cash.

Broad - ‘anything of value’ Broad – “improper benefits”

includes money, property,

interests, intangible benefits

Facilitation

payments

Defence available –

documented 7 years

Partial permission for “routine

government action”

No exception for facilitation

payments

Hospitality/

gifts

No specific exemption or

defence

Only if reasonable bona fide

expenses; cultural

Specific criteria distinguishes

bribe from gift

No exception for hospitality

Failure to

prevent

bribery

Due diligence and

corporate culture defence

for companies

Liable for employees, officers,

agents and distributors

Compliance programs are

considered in practice but are

not a defence

Penalties Individual:10yrs jail+$1.8m

Company:$18m/10%

turnover/3xbenefits

Individual: life imprisonment or

capital punishment

Company: Criminal charges,

fines

Individual: RMB 10,000 – more

than RMB 5m + up to 10yrs

imprisonment

Company: RMB 200,000 or more.

COMPARISON OF UK AND USA LEGISLATION

UKBribery Act

USAForeign Corrupt Practices Act

Intention Intended to influence the FPO – irrelevant

if conduct culturally acceptable etc

Intended to “knowingly” influence

the FPO – irrelevant if conduct

culturally acceptable

Benefit Broad: ‘an advantage’ Broad: ‘anything of value’

Facilitation

payments

Not permitted Partial permission for “routine

governmental action”

Hospitality/gifts Can amount to a bribe if lavish or

disproportionate

Certain categories/value of gifts

permitted;

Hospitality only if reasonable

Failure to

prevent bribery

Strict liability – “adequate procedures”

defence only

No specific offence under this Act

but liability under companies

legislation.

Penalties 10 yrs imprisonment

Unlimited fines for individuals and

companies, confiscation of proceeds

5-20 yrs imprisonment

USD $5m individual

USD $2.5 - $25m (or 3x bribe

value) company + civil fines,

disgorgement etc

AUSTRALIA’S NEWAPPROACH

Combatting Corporate Crime Bill 2017 - likely to be law 2020.

Will

change

Australian

law

Extend definition of foreign public official – incl. ‘candidates’

Replace ‘not legitimately due’ for ‘improperly influence’

Extend ‘business advantage’ to ‘personal advantage’

Add offence to bribe ‘recklessly’ – no exact outcome

New offence; ‘failure to prevent’ bribery

Effective ‘adequate procedures’ as a defence

Liable for ‘associate’ in whole of supply chain

DPA’s Deferred Prosecution Agreements

Facilitation payment defence – likely to remain

› DPAs will allow Australian prosecutors to negotiate and enter into an agreement with a company caught bribing

› Benefits:

• Encourages self reporting as companies can avoid prosecution

• Provides greater certainty than a trial (and cheaper, faster)

• Companies can negotiate discounts on penalties if they comply

• Publicised and monitored

• Better than fines at the expense of the shareholder

• Discourages ‘lawyering up’ when bribery detected

DEFERRED PROSECUTION AGREEMENTS

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UK GUIDANCE ON ADEQUATE PROCEDURES

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Company directors are liable for bribery by any associates in any part of their operation – unless it has taken adequate procedures

Principle 1: proportionate procedures

Principle 2: top-level commitment

Principle 3: risk assessment

Principle 4: due diligence

Principle 5: communication (+ training/policies)

Principle 6: monitoring and review

CORPORATE LIABILITY FOR ‘ASSOCIATES’

Drawn from UK Bribery Act, the Bill defines “Associate” very broadly:

an officer, employee, agent, contractor, subsidiary or controlled entity of the body corporate or a person who otherwise performs services for the body corporate. This person can be an individual, or an incorporated or unincorporated body.

• The definition includes a subsidiary that is incorporated outside of Australia.

• Reverses the onus of proof

• In its absence, assume tolerance or ignorance of bribery as a business practice

• Untested in Australia but UK Bribery Act 2015 as guidance

The difference between the rotten apple and the rotten tree

INTERNATIONAL LESSONS:CASE STUDIES

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Serious Fraud Office v Rolls-Royce plc

• Rolls-Royce engaged in a bribery between 1989 - 2013 spanning 7 countries.

• Foreign Officials bribed with money and cars in order to secure orders, often for aeroplane engines.

• Rolls-Royce had a comprehensive anti-bribery codes and policies in place, and implemented more comprehensive policies following an audit in 2009.

• The Court found:

• the bribery prevention measures were inadequate in the context of this type of organisation and the countries in which they were operating.

• there were several aggravating features, including that Rolls Royce’ conduct was persistent and involved senior employees.

• the lack of anti-bribery training provided to employees resulted in a culture of non-compliance.

• Rolls-Royce entered into a DPA and fined ₤671 million.

FACILITATION PAYMENTS

› Small payments to speed a usual process

› Banned in all but 3 OECD countries

› Can be mistaken as bribes

› Illegal in local jurisdiction & other jurisdictions (e.g. US and UK)

› A risky practice at best.

› Often perceived as acceptable

› Australian Government will not support these payments in foreign markets

› How to report requests?

› Is it fair on business?

Facilitation payments are a business risk, not just a nuisance or part of the costs of doing business

CAN BUSINESS WORK WITHOUT THESE PAYMENTS?

240 mining companies, including our biggest exporters, work in the most corrupt markets

Pushback on facilitation payment:

‘When these payments are made, it's important to understand the real intent of the payments, and the underlying intent of a facilitation payment is just to get a job done. There are many countries in Africa that are emerging from conflict situations and have a lot of challenges - a lack of foreign investment, a lack of industry and a lack of tax collection, a lack of capacity in government to pay the public service and to pay public servants to do the job they should be doing.’

• Bill Turner, Chairman of the Australia-Africa Mining Industry Group

AGENTS AND REPORTING

Agents

• A risk of bribery – know local scene. Use excessive commissions• OECD focus after Securency – see Guide to engaging agents• Austrade can refer 3 ‘clean’ agents. • Company does due diligence and training - like staff• Vicarious liability for agents – cannot outsource corruption

Reporting

• Self reporting encouraged • Difficult decision - report or first seek internal investigation• Encourage reporting to AFP (not Austrade)• Reporting has fallen away since 2011• Automate and protect reporting for whistle-blowers

GIFT POLICY AND ENTERTAINMENT

Gifts

• Published policy on what is acceptable, what must be reported• Austrade policy is return without offence or keep and record under

$AUD 100 – refuse anything over $AUD500• Creeps into transactions, tenders, seminar samples, money or like in

value, to third parties. Used to establish a practice.

Entertainment

› No guidance on what’s reasonable› Either refuse all (US standard) or seek approval and document

(Australia) and have adequate procedures (Aust & UK)› Business will always be done over a meal –needs mutual

understanding

Increase in Vietnamese companies on the Australian Stock Exchange –compliance requirements:

• Anti-bribery laws

• Directors duties

• Company reporting requirements

Foreign investment regulation:

• Financial Investment Review Board (FIRB)

• Restrictions on foreign real estate purchases

• Money transfers and laundering (AUSTRAC)

IMPACT ON VIETNAMESE INVESTORS

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FIRB approvals required for when commercial real estate (regardless of value) or 20% or more of any type of business valued at >$1,134 million.

Approval unlikely to be given to foreign companies that engage in corrupt or illegal behaviour.

Listed companies must comply with the ASX Listing Rules:

• Continuous disclosure - obligation to immediately disclose any information that may have a material effect on the entity’s securities.

• Transactions with persons in a position of influence - including the obligation to notify shareholders of transactions with related parties.

• Documentary requirements – provision of documents to the ASX.

IMPACT ON FOREIGN INVESTMENT

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ISSUES FOR AUSTRALIAN BUSINESS

• Must have adequate procedures - nothing in place presumes acceptance.

• Responsibility for all associates in a global supply chain

• Many SME’s remain unprepared. We are focussed on raising awareness

• More companies are confronting and mitigating as a business risk

• More likely to have trouble with regional government than central

• Not all jurisdictions have the same type or level of corruption risk

• Refusing a bribe – short term loss, long term profit –future-proofing

• Companies (even competitors) can exercise collective market power

• Bribes indicative of other failings - illegal activities or poor goods/services

• Failure to self report looks like a cover-up when eventually discovered

• Increasing reliance on advice - government, professionals, civil society

• Whistle-blowers better protected – best source of evidence

• Subject to web of laws by other countries – jurisdiction and co-ordination

GLOBAL issues

Anti-corruption campaigns are popular in growing economies

Increased reporting - means more detection (not corruption)

Self reporting v fines (UK v US) approach.

Industrial scale bribery (Unaoil) - stamp out or go professional

Outlaw countries lose other benefits (trade/investment)

Shareholder demand for ethical investment/behavior will extend to partner undertakings

Globalism: Increased responsibility for global supply chain e.g. money-laundering, funding terrorism, proceeds of crime, modern slavery laws. Outlaw countries miss the benefits of trade/invest

AFP: better resources & detection methods – more prosecutions

OECD maintains pressure for convictions and awareness of law

Can business cope without facilitation payments defence?

Social/economic changes will force government to act

Joint ventures require you look after your side

Business will be judged by its response to these risks

INTRODUCTION TO COUNTRY GUIDES

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1. rankings in key international corruption ranking tools (including Transparency

International’s Corruption Perceptions Index)

2. recent efforts made to combat bribery and corruption (including any ‘crack downs’

announced by government)

3. anti-bribery and corruption laws, including types of offences

4. level of enforcement of those laws

5. penalties available under those laws

6. the degree of risk posed by a range of industries and institutions (egg. public services,

police and land administration)

7. any international treaties and memberships to which the jurisdiction is party

The Introduction to Country Guides summarise the risk of bribery and corruption posed by each Austrade jurisdiction.

They consider, with respect to each jurisdiction:

VIETNAM (EXAMPLE)

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PRACTICAL ASSISTANCE FROM GOVERNMENT

• Use of the Badge of Government• Representation, negotiation and support• Accompany to meetings/negotiations• Referral to lawyers and investigators• Download our suite of policies, disclaimers, training for staff, ‘red flag’

warnings, compliance guides anti-bribery@austrade.gov.au• Use Austrade’s ‘welcome to country’ guide and bribery index.• Use Austrade materials – at a minimum, it is insurance in the absence

of any other ‘adequate procedures’• Government to government approach if a market access issue• We work to facilitate your trade not advise how to break the law

• The Commonwealth’s reputation counts – and we have zero tolerance for illegal behaviour. We regularly suspend service if clients breach

• Exporters are subject to local, Australian and foreign laws

WHAT CAN BUSINESS DO?

• Corporate Governance

› Publish clear anti-bribery policies

› Issue a statement of intent – business ethics

› Ensure relevant people are trained to recognise and deal with corruption

› Establish internal controls over expenditure and ban facilitation payments

› Conduct due-diligence checks on third-party agents and ban corrupt ones

› Ensure the basis and calculation of any payments such as commissions are properly recorded, transparent, explainable and relate legitimately to the services provided.

› Ensure all interactions are recorded and include anti-bribery provisions in contracts, e-mail disclaimers.

› Publish clear policies esp. gifts and entertainment for staff to follow

• Seek independent legal advice

BUSINESS MUST ACT

Business must embrace active compliance, culture driven from the top. Video the CEO

Be awareness of laws (local and international) and read widely on risks in certain government controlled industries

Vet all associates in whole supply chain in all locations – cannot outsource bribery

Have policy guidance on agents/gifts/facilitation payments/hospitality policy/sponsored travel – staff like guidanceTraining & Communication Systems with active reportingFinancial controls tested

Rotation and oversight of roles

Seek business references and complete business partner questionnaire

KEY MESSAGES

•Bribery is a crime. Fines and jail time.•The onus is on business to show adequate procedures are taken to prevent bribery in every part of its global supply chain.

•Foreign bribery is a business risk; be alert to the signs.

•If in doubt, seek professional advice•The Australian Government can help

RESOURCES AND MATERIALS

Australian Trade Commission

www.austrade.gov.au

www.austrade.gov.au/Exporters/About-

Exporting/Legal-issues/Bribery-of-

foreign-public-officials

Attorney-General’s Department Crime

Prevention

www.crimeprevention.gov.au/Financial

crime/Pages/

Briberyofforeignpublicofficials.aspx

For further information, please contact David TonkinChief Counsel, Legal Procurement & FraudAustralian Trade and Investment Commissiondavid.tonkin@Austrade.gov.au+61 2 93902807+ 0419297018v4

THANK YOU

For Official Use Only

ANTI-BRIBERY PRINCIPLES UK GUIDANCE ON ADEQUATE PROCEDURES

AUGUST 2019

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CONTENTS

Principle 1 – Proportionate procedures …………………………………………………………………………….3

Principle 2 – Top-level commitment ………………………………………………………………………………...5

Principle 3 – Risk Assessment ………………………………………………………………………………………7

Principle 4 – Due diligence ………………………………………………………………………………………….9

Principle 5 – Communication (including training) ………………………………………………….…………….11

Principle 6 – Monitoring and review ………………………………………………………………………………13

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PRINCIPLE 1 Proportionate procedures

A commercial organisation’s procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation’s activities. They are also clear, practical, accessible, effectively implemented and enforced.

Commentary

1.1 The term ‘procedures’ is used in this guidance to embrace both bribery prevention policies and the procedures which implement them. Policies articulate a commercial organisation’s anti-bribery stance, show how it will be maintained and help to create an anti-bribery culture. They are therefore a necessary measure in the prevention of bribery, but they will not achieve that objective unless they are properly implemented. Further guidance on implementation is provided through principles 2 to 6.

1.2 Adequate bribery prevention procedures ought to be proportionate to the bribery risks that the organisation faces. An initial assessment of risk across the organisation is therefore a necessary first step. To a certain extent the level of risk will be linked to the size of the organisation and the nature and complexity of its business, but size will not be the only determining factor. Some small organisations can face quite significant risks, and will need more extensive procedures than their counterparts facing limited risks. However, small organisations are unlikely to need procedures that are as extensive as those of a large multi-national organisation. For example, a very small business may be able to rely heavily on periodic oral briefings to communicate its policies while a large one may need to rely on extensive written communication.

1.3 The level of risk that organisations face will also vary with the type and nature of the persons associated with it. For example, a commercial organisation that properly assesses that there is no risk of bribery on the part of one of its associated persons will accordingly require nothing in the way of procedures to prevent bribery in the context of that relationship. By the same token the bribery risks associated with reliance on a third party agent representing a commercial organisation in negotiations with foreign public officials may be assessed as significant and accordingly require much more in the way of procedures to mitigate those risks. Organisations are likely to need to select procedures to cover a broad range of risks but any consideration by a court in an individual case of the adequacy of procedures is likely necessarily to focus on those procedures designed to prevent bribery on the part of the associated person committing the offence in question.

1.4 Bribery prevention procedures may be stand alone or form part of wider guidance, for example on

recruitment or on managing a tender process in public procurement. Whatever the chosen model, the procedures should seek to ensure there is a practical and realistic means of achieving the organisation’s stated anti-bribery policy objectives across all of the organisation’s functions.

The Government recognises that applying these procedures retrospectively to existing associated persons is more difficult, but this should be done over time, adopting a risk-based approach and with due allowance for what is practicable and the level of control over existing arrangements.

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1.5 Commercial organisations’ bribery prevention policies are likely to include certain common elements. As an indicative and not exhaustive list, an organisation may wish to cover in its policies:

• its commitment to bribery prevention (see Principle 2)

• its general approach to mitigation of specific bribery risks, such as those arising from the conduct of intermediaries and agents, or those associated with hospitality and promotional expenditure, facilitation payments or political and charitable donations or contributions; (see Principle 3 on risk assessment)

• an overview of its strategy to implement its bribery prevention policies.

1.6 The procedures put in place to implement an organisation’s bribery prevention policies should be

designed to mitigate identified risks as well as to prevent deliberate unethical conduct on the part of associated persons. The following is an indicative and not exhaustive list of the topics that bribery prevention procedures might embrace depending on the particular risks faced:

• The involvement of the organisation’s top-level management (see Principle 2).

• Risk assessment procedures (see Principle 3).

• Due diligence of existing or prospective associated persons (see Principle 4).

• The provision of gifts, hospitality and promotional expenditure; charitable and political donations; or demands for facilitation payments.

• Direct and indirect employment, including recruitment, terms and conditions, disciplinary action and remuneration.

• Governance of business relationships with all other associated persons including pre and post contractual agreements.

• Financial and commercial controls such as adequate bookkeeping, auditing and approval of expenditure.

• Transparency of transactions and disclosure of information.

• Decision making, such as delegation of authority procedures, separation of functions and the avoidance of conflicts of interest.

• Enforcement, detailing discipline processes and sanctions for breaches of the organisation’s anti-bribery rules.

• The reporting of bribery including ‘speak up’ or ‘whistle blowing’ procedures.

• The detail of the process by which the organisation plans to implement its bribery prevention procedures, for example, how its policy will be applied to individual projects and to different parts of the organisation.

• The communication of the organisation’s policies and procedures, and training in their application (see Principle 5).

• The monitoring, review and evaluation of bribery prevention procedures (see Principle 6)

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PRINCIPLE 2 Top-level commitment The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable. 2.1 Those at the top of an organisation are in the best position to foster a culture of integrity where

bribery is unacceptable. The purpose of this principle is to encourage the involvement of top-level management in the determination of bribery prevention procedures. It is also to encourage top-level involvement in any key decision making relating to bribery risk where that is appropriate for the organisation’s management structure.

Procedures 2.2 Whatever the size, structure or market of a commercial organisation, top-level management

commitment to bribery prevention is likely to include (1) communication of the organisation’s anti-bribery stance, and (2) an appropriate degree of involvement in developing bribery prevention procedures.

Internal and external communication of the commitment to zero tolerance to bribery 2.3 This could take a variety of forms. A formal statement appropriately communicated can be very

effective in establishing an anti-bribery culture within an organisation. Communication might be tailored to different audiences. The statement would probably need to be drawn to people’s attention on a periodic basis and could be generally available, for example on an organisation’s intranet and/or internet site. Effective formal statements that demonstrate top level commitment are likely to include:

• a commitment to carry out business fairly, honestly and openly

• a commitment to zero tolerance towards bribery

• the consequences of breaching the policy for employees and managers

• for other associated persons the consequences of breaching contractual provisions relating to bribery prevention (this could include a reference to avoiding doing business with others who do not commit to doing business without bribery as a ‘best practice’ objective)

• articulation of the business benefits of rejecting bribery (reputational, customer and business partner confidence)

• reference to the range of bribery prevention procedures the commercial organisation has or is putting in place, including any protection and procedures for confidential reporting of bribery (whistle-blowing)

• key individuals and departments involved in the development and implementation of the organisation’s bribery prevention procedures

• reference to the organisation’s involvement in any collective action against bribery in, for example, the same business sector.

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Top-level involvement in bribery prevention 2.4 Effective leadership in bribery prevention will take a variety of forms appropriate for and

proportionate to the organisation’s size, management structure and circumstances. In smaller organisations a proportionate response may require top-level managers to be personally involved in initiating, developing and implementing bribery prevention procedures and bribery critical decision making. In a large multi-national organisation the board should be responsible for setting bribery prevention policies, tasking management to design, operate and monitor bribery prevention procedures, and keeping these policies and procedures under regular review. But whatever the appropriate model, top-level engagement is likely to reflect the following elements:

• Selection and training of senior managers to lead anti-bribery work where appropriate.

• Leadership on key measures such as a code of conduct.

• Endorsement of all bribery prevention related publications.

• Leadership in awareness raising and encouraging transparent dialogue throughout the organisation so as to seek to ensure effective dissemination of anti-bribery policies and procedures to employees, subsidiaries, and associated persons, etc.

• Engagement with relevant associated persons and external bodies, such as sectoral organisations and the media, to help articulate the organisation’s policies.

• Specific involvement in high profile and critical decision making where appropriate.

• Assurance of risk assessment.

• General oversight of breaches of procedures and the provision of feedback to the board or equivalent, where appropriate, on levels of compliance.

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PRINCIPLE 3

Risk Assessment

The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented.

Commentary

3.1 For many commercial organisations this principle will manifest itself as part of a more general risk assessment carried out in relation to business objectives. For others, its application may produce a more specific stand-alone bribery risk assessment. The purpose of this principle is to promote the adoption of risk assessment procedures that are proportionate to the organisation’s size and structure and to the nature, scale and location of its activities. But whatever approach is adopted the fuller the understanding of the bribery risks an organisation faces the more effective its efforts to prevent bribery are likely to be.

3.2 Some aspects of risk assessment involve procedures that fall within the generally accepted meaning of the term ‘due diligence’. The role of due diligence as a risk mitigation tool is separately dealt with under Principle 4.

Procedures

3.3 Risk assessment procedures that enable the commercial organisation accurately to identify and prioritise the risks it faces will, whatever its size, activities, customers or markets, usually reflect a few basic characteristics. These are:

• Oversight of the risk assessment by top level management.

• Appropriate resourcing – this should reflect the scale of the organisation’s business and the need to identify and prioritise all relevant risks.

• Identification of the internal and external information sources that will enable risk to be assessed and reviewed.

• Due diligence enquiries (see Principle 4).

• Accurate and appropriate documentation of the risk assessment and its conclusions.

3.4 As a commercial organisation’s business evolves, so will the bribery risks it faces and hence so should its risk assessment. For example, the risk assessment that applies to a commercial organisation’s domestic operations might not apply when it enters a new market in a part of the world in which it has not done business before (see Principle 6 for more on this).

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Commonly encountered risks

3.5 Commonly encountered external risks can be categorised into five broad groups – country, sectoral, transaction, business opportunity and business partnership:

• Country risk: this is evidenced by perceived high levels of corruption, an absence of effectively implemented anti-bribery legislation and a failure of the foreign government, media, local business community and civil society effectively to promote transparent procurement and investment policies.

• Sectoral risk: some sectors are higher risk than others. Higher risk sectors include the extractive industries and the large scale infrastructure sector.

• Transaction risk: certain types of transaction give rise to higher risks, for example, charitable or political contributions, licences and permits, and transactions relating to public procurement.

• Business opportunity risk: such risks might arise in high value projects or with projects involving many contractors or intermediaries; or with projects which are not apparently undertaken at market prices, or which do not have a clear legitimate objective.

• Business partnership risk: certain relationships may involve higher risk, for example, the use of intermediaries in transactions with foreign public officials; consortia or joint venture partners; and relationships with politically exposed persons where the proposed business relationship involves, or is linked to, a prominent public official.

3.6 An assessment of external bribery risks is intended to help decide how those risks can be mitigated by procedures governing the relevant operations or business relationships; but a bribery risk assessment should also examine the extent to which internal structures or procedures may themselves add to the level of risk. Commonly encountered internal factors may include:

• deficiencies in employee training, skills and knowledge

• bonus culture that rewards excessive risk taking

• lack of clarity in the organisation’s policies on, and procedures for, hospitality and promotional expenditure, and political or charitable contributions

• lack of clear financial controls

• lack of a clear anti-bribery message from the top-level management.

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PRINCIPLE 4

Due diligence

The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.

Commentary

4.1 Due diligence is firmly established as an element of corporate good governance and it is envisaged that due diligence related to bribery prevention will often form part of a wider due diligence framework. Due diligence procedures are both a form of bribery risk assessment (see Principle 3) and a means of mitigating a risk. By way of illustration, a commercial organisation may identify risks that as a general proposition attach to doing business in reliance upon local third party intermediaries. Due diligence of specific prospective third party intermediaries could significantly mitigate these risks. The significance of the role of due diligence in bribery risk mitigation justifies its inclusion here as a Principle in its own right.

4.2 The purpose of this Principle is to encourage commercial organisations to put in place due diligence procedures that adequately inform the application of proportionate measures designed to prevent persons associated with them from bribing on their behalf.

Procedures

4.3 As this guidance emphasises throughout, due diligence procedures should be proportionate to the identified risk. They can also be undertaken internally or by external consultants. A person ‘associated’ with a commercial organisation as set out at section 8 of the Bribery Act includes any person performing services for a commercial organisation. As explained at paragraphs 37 to 43 in the section ‘Government Policy and section 7’, the scope of this definition is broad and can embrace a wide range of business relationships. But the appropriate level of due diligence to prevent bribery will vary enormously depending on the risks arising from the particular relationship. So, for example, the appropriate level of due diligence required by a commercial organisation when contracting for the performance of information technology services may be low, to reflect low risks of bribery on its behalf. In contrast, an organisation that is selecting an intermediary to assist in establishing a business in foreign markets will typically require a much higher level of due diligence to mitigate the risks of bribery on its behalf.

4.4 Organisations will need to take considerable care in entering into certain business relationships, due to the particular circumstances in which the relationships come into existence. An example is where local law or convention dictates the use of local agents in circumstances where it may be difficult for a commercial organisation to extricate itself from a business relationship once established. The importance of thorough due diligence and risk mitigation prior to any commitment are paramount in such circumstances. Another relationship that carries particularly important due diligence implications is a merger of commercial organisations or an acquisition of one by another.

4.5 ‘Due diligence’ for the purposes of Principle 4 should be conducted using a risk-based approach (as referred to on page 27). For example, in lower risk situations, commercial organisations may decide that there is no need to conduct much in the way of due diligence. In higher risk situations,

10

due diligence may include conducting direct interrogative enquiries, indirect investigations, or general research on proposed associated persons. Appraisal and continued monitoring of recruited or engaged ‘associated’ persons may also be required, proportionate to the identified risks. Generally, more information is likely to be required from prospective and existing associated persons that are incorporated (e.g. companies) than from individuals. This is because on a basic level more individuals are likely to be involved in the performance of services by a company and the exact nature of the roles of such individuals or other connected bodies may not be immediately obvious. Accordingly, due diligence may involve direct requests for details on the background, expertise and business experience, of relevant individuals. This information can then be verified through research and the following up of references, etc.

4.6 A commercial organisation’s employees are presumed to be persons ‘associated’ with the organisation for the purposes of the Bribery Act. The organisation may wish, therefore, to incorporate in its recruitment and human resources procedures an appropriate level of due diligence to mitigate the risks of bribery being undertaken by employees which is proportionate to the risk associated with the post in question. Due diligence is unlikely to be needed in relation to lower risk posts.

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PRINCIPLE 5

Communication (including training) The commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training that is proportionate to the risks it faces. Commentary

5.1 Communication and training deters bribery by associated persons by enhancing awareness and understanding of a commercial organisation’s procedures and to the organisation’s commitment to their proper application. Making information available assists in more effective monitoring, evaluation and review of bribery prevention procedures. Training provides the knowledge and skills needed to employ the organisation’s procedures and deal with any bribery related problems or issues that may arise.

Procedures (Communication) 5.2 The content, language and tone of communications for internal consumption may vary from that

for external use in response to the different relationship the audience has with the commercial organisation. The nature of communication will vary enormously between commercial organisations in accordance with the different bribery risks faced, the size of the organisation and the scale and nature of its activities.

5.3 Internal communications should convey the ‘tone from the top’ but are also likely to focus on the implementation of the organisation’s policies and procedures and the implications for employees. Such communication includes policies on particular areas such as decision making, financial control, hospitality and promotional expenditure, facilitation payments, training, charitable and political donations and penalties for breach of rules and the articulation of management roles at different levels. Another important aspect of internal communications is the establishment of a secure, confidential and accessible means for internal or external parties to raise concerns about bribery on the part of associated persons, to provide suggestions for improvement of bribery prevention procedures and controls and for requesting advice. These so called ‘speak up’ procedures can amount to a very helpful management tool for commercial organisations with diverse operations that may be in many countries. If these procedures are to be effective there must be adequate protection for those reporting concerns.

5.4 External communication of bribery prevention policies through a statement or codes of conduct, for example, can reassure existing and prospective associated persons and can act as a deterrent to those intending to bribe on a commercial organisation’s behalf. Such communications can include information on bribery prevention procedures and controls, sanctions, results of internal surveys, rules governing recruitment, procurement and tendering. A commercial organisation may consider it proportionate and appropriate to communicate its anti-bribery policies and commitment to them to a wider audience, such as other organisations in its sector and to sectoral organisations that would fall outside the scope of the range of its associated persons, or to the general public.

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Training

5.5 Like all procedures training should be proportionate to risk but some training is likely to be effective in firmly establishing an anti-bribery culture whatever the level of risk. Training may take the form of education and awareness raising about the threats posed by bribery in general and in the sector or areas in which the organisation operates in particular, and the various ways it is being addressed.

5.6 General training could be mandatory for new employees or for agents (on a weighted risk basis) as

part of an induction process, but it should also be tailored to the specific risks associated with specific posts. Consideration should also be given to tailoring training to the special needs of those involved in any ‘speak up’ procedures, and higher risk functions such as purchasing, contracting, distribution and marketing, and working in high risk countries. Effective training is continuous, and regularly monitored and evaluated.

5.7 It may be appropriate to require associated persons to undergo training. This will be particularly

relevant for high risk associated persons. In any event, organisations may wish to encourage associated persons to adopt bribery prevention training.

5.8 Nowadays there are many different training formats available in addition to the traditional

classroom or seminar formats, such as e-learning and other web-based tools. But whatever the format, the training ought to achieve its objective of ensuring that those participating in it develop a firm understanding of what the relevant policies and procedures mean in practice for them.

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PRINCIPLE 6

Monitoring and review

The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary. Commentary

6.1 The bribery risks that a commercial organisation faces may change over time, as may the nature and scale of its activities, so the procedures required to mitigate those risks are also likely to change. Commercial organisations will therefore wish to consider how to monitor and evaluate the effectiveness of their bribery prevention procedures and adapt them where necessary. In addition to regular monitoring, an organisation might want to review its processes in response to other stimuli, for example governmental changes in countries in which they operate, an incident of bribery or negative press reports.

Procedures

6.2 There is a wide range of internal and external review mechanisms which commercial organisations could consider using. Systems set up to deter, detect and investigate bribery, and monitor the ethical quality of transactions, such as internal financial control mechanisms, will help provide insight into the effectiveness of procedures designed to prevent bribery. Staff surveys, questionnaires and feedback from training can also provide an important source of information on effectiveness and a means by which employees and other associated persons can inform continuing improvement of anti-bribery policies.

6.3 Organisations could also consider formal periodic reviews and reports for top-level management. Organisations could also draw on information on other organisations’ practices, for example relevant trade bodies or regulators might highlight examples of good or bad practice in their publications.

6.4 In addition, organisations might wish to consider seeking some form of external verification

or assurance of the effectiveness of anti-bribery procedures. Some organisations may be able to apply for certified compliance with one of the independently-verified anti-bribery standards maintained by industrial sector associations or multilateral bodies. However, such certification may not necessarily mean that a commercial organisation’s bribery prevention procedures are ‘adequate’ for all purposes where an offence under section 7 of the Bribery Act could be charged.

SLIDE 3

Australia’s International Obligations - OECD

The Organisation for Economic Cooperation and Development (OECD) is a group of

democratic countries that assist governments to tackle economic, social and governance

challenges.

o It works with more than 70 non-member countries and a range of civil society and

international organisations on a number of issues including:

economic growth and stability,

employment,

education and social cohesion,

trade and international investment,

sustainable development,

governance,

best use of new technologies,

development cooperation; and

cooperative relations.

What is the OECD Anti-Bribery Convention?

o Convention on Combating Bribery of Foreign Public Officials in International Business

Transactions (the Convention) was developed in response to recognition of the need

for national efforts and multilateral cooperation to address the problem of bribery.

o The Convention requires countries to:

legislate against the giving or offering of a bribe to a foreign public official to

gain or retain a business advantage.

adopt common rules to punish individuals and companies who engage in

bribery transactions.

2009 OECD Recommendation for Further Combating Bribery of Foreign Public Officials in

International Business Transactions

o parties to the Convention agreed to put in place new measures to reinforce their

efforts to prevent, detect and investigate foreign bribery

Australia’s implementing legislation for the Convention is contained in Division 70 of the

Criminal Code - which is the Schedule to the Criminal Code Act 1995 (Cth).

The Working Group on Bribery in International Business Transactions is responsible for the

monitoring of the Convention through Self and mutual evaluation of the Convention and the

1997 Revised Recommendation.

Development of the Convention

o In December 1996 the UN General Assembly adopted a Declaration Against

Corruption and Bribery in International Business Transactions.

o Australia is also a party to the UN Convention against Corruption (UNCAC).

o In May 1997 the OECD Ministerial Council recommended that measures to combat

bribery in international business transactions, including the criminalisation of bribery

of foreign public officials, should be legislated in all member countries.

o Australia endorsed this recommendation.

o The Convention was developed in response to the OECD Ministerial Council

recommendation.

o On 21 November 1997, OECD Member countries and five non-member countries

adopted the Convention.

o Australia signed the Convention on 7 December 1998, ratified it on 18 October 1999,

and it entered into force for Australia on 18 December 1999 (the day following the

legislation). Australia’s implementing legislation came into force on 17 December

1999.

The consequences of foreign bribery for Australia

Foreign bribery and other types of corruption:

o skew competition,

o inhibit business growth; and

o ultimately shrink the global market for Australian exports and investment.

Incidents of foreign bribery in Australia or by Australians undermine the reputation of all

Australian businesses and impact negatively on business and government relations.

SLIDE 3

The offence of bribing a foreign official

What is the offence?

The offence is contained in section 70.2 of the Criminal Code Act 1995 (Cth).

All of these elements must be present for the offence to apply:

o provides a benefit to another person

o offers or promises to provide a benefit to another person OR

o causes a benefit to be provided, offered or promised to another person

with the intention of influencing a foreign public official (who may or may

not be the other person) in the exercise of the official’s duties as a foreign

public official in order to:

obtain or retain business OR

obtain or retain a business advantage which is not legitimately due.

AND

o the benefit is not legitimately due to the other person

When does the offence apply?

The offence applies:

o where the conduct constituting the offence occurs in Australia, or on board an

Australian aircraft or an Australian ship.

o to conduct outside Australia where, at the time of the alleged offence, the alleged

offender is:

an Australian citizen

a resident of Australia, or

a body corporate incorporated by or under a law of the Commonwealth or

of a State or Territory.

The offence applies regardless of:

o regardless of the outcome or result of the bribe

o the alleged necessity of the payment

o intention to bribe a particular foreign public official.

What is a ‘benefit’?

A benefit is any advantage, not limited to property.

A benefit can be a non-monetary or non-tangible inducement.

It does not need to be provided or offered to the foreign public official, it can be provided or

offered to another person.

A benefit can also be provided or offered by an agent.

Who is a ‘foreign public official’?

The definition of ‘foreign public official’ is very broad, and includes:

o an employee or official of a foreign government

o a member of the executive, judiciary or magistracy of a foreign country

o a person who performs official duties under a foreign law

o a member or officer of the legislature of a foreign country

o an employee or official of a public international organisation (such as the United

Nations).

What are the penalties?

The maximum penalty for an individual is 10 years imprisonment and/or a fine of 10,000

penalty units ($1.8 million).

The penalty for a body corporate can be a fine issued in penalty units or it can be a

proportional penalty, calculated according to the value of benefits obtained from bribery, or

the annual turnover of the company.

o If the value of direct or indirect benefits reasonably attributable to the bribery can

be determined, the penalty is the greater of 100,000 penalty units ($18 million) or 3

times the value of benefits.

o If the value of benefits cannot be determined, the penalty for a body corporate is

the greater of 100,000 penalty units or 10% of ‘annual turnover’ of the body

corporate and related bodies corporate.

o In addition to criminal penalties, any benefits obtained through foreign bribery can

be forfeited to the Australian Government under the Proceeds of Crime Act 2002

(Cth).

o Corporate and agent liability Companies need to be aware that they may be liable

for the actions of their employees and agents under Australian law and foreign law.

o People that engage in bribery while acting as an agent also may be individually liable

and may be prosecuted under Australian or foreign law.

The penalties of the host country as well as third-party countries may also apply if they have

a legitimate interest and jurisdiction over the offending conduct.

SLIDE 5

Practical steps to take in managing and mitigating risk - Vietnam

The fight against bribery and corruption should remain an ongoing discussion for all

corporations and boards. If the risk of foreign bribery is not managed effectively, the

potential damage to a corporation can be substantial.

o The requirement to manage extends beyond bribery to payments which are being

conducted in an open and transparent way.

You must ensure that they can be defended on the basis of being facilitation

payments.

Directors should ensure their companies closely monitor the government’s guidance

o Important to engage with any government consultation process.

o Ensure clarity around government expectations.

o Ensure systems and processes meet those expectations.

Directors have a positive responsibility to ensure such issues do not arise – it is not enough

to be reactive.

Staff and processes

It can be helpful initially at least to appoint a head of finance/CFO who is not a Vietnamese

local. This is an additional step that assists in ensuring your anti-bribery and corruption

processes are understood and followed.

Key to compliance is having robust internal systems and processes to ensure conformity

with Australian law

o Visibility through regular reporting to directors on implementation and effectiveness

of the anti-corruption policy and actions taken to detect and monitor issues

Culture

Ensure senior management are visibly committed to the development and implementation

of the policies and procedures, so a culture is developed which encourages and enables staff

to report suspicious conduct.

o Include sufficient controls to ensure that internal financial reports are managed

properly and recorded accurately.

o Ensure policies and procedures are effectively communicated to staff, including

through practical training and compliance monitoring.

o Periodically review policies and procedures and document steps undertaken to

develop, implement, monitor and review policies and procedures.

Push for a new federal anti-corruption watchdog

There has been a significant push over the last 12 months from groups such as Transparency

International Australia and the Australia Institute to establish a federal anti-corruption

watchdog, in order to enhance public confidence in the Australian Government.

On 13 December 2018, the Australian Government announced that it will establish a

Commonwealth Integrity Commission (CIC). The Australian Government has released a

consultation paper which provides an overview of its proposed framework for creating a CIC.

Regardless of the final shape of the CIC, it is clear that the Australian Government is

committed to the fight against bribery and corruption, and responding to criticisms of

previous measures.

Practical steps when doing business using third parties

Practical steps that corporates should have in mind when engaging agents, intermediaries

and other high-risk third parties include the following:

o Take a close look at your anti-bribery and corruption (ABC) procedures for

appointment of third parties and ensure they are robust and being implemented.

o Carry out risk-based due diligence.

The higher the risk, the greater the level of scrutiny of the agent or

intermediary.

o At the very least, desktop due diligence should be undertaken through internet

searches or third party providers.

For high-risk agents, on the ground due diligence from a third party provider

is advisable.

o Use Agent Questionnaires to ask questions in relation to key areas such as

ownership, connections to Foreign Public Officials, and information on their own

ABC compliance processes.

o If high-risk, conduct face-to-face interviews with agents.

Make sure that they are actually providing a service for the fees paid.

o Ensure that there is a proper and supportable commercial justification for the

appointment and that the proposed payment mechanism is appropriate.

o Look for, identify and deal with any red flags.

Ignorance is not a defence.

o Where practical, ensure that the person/body who approves the appointment of the

agent is independent of the business unit that wants it.

o Monitor the relationship and repeat due diligence at intervals.

o Document all of the above.

Challenges for new market entrants – and tips to overcome them

There are a number of challenges for new market entrants such as:

o Procurement processes can be complicated and time-consuming.

Partnering with local service providers or medical device distributors can

provide faster access to the Vietnamese market including its decision

makers, distribution networks and end-user contacts.

Local partners can also help to overcome language barriers, share working

capital and draw on their expertise in local licensing procedures.

To succeed in the Vietnamese market, it is important to consider several important factors.

These include:

o adapting to the local business culture

o finding the right local partners and staff

o ensuring the adaptability of products to the local market.

Companies should invest resources to raise awareness of digital solutions.

o This will drive a change in consumer perception and behaviour.

Companies should invest time in understanding their chosen sector in Vietnam, including its

people, processes and technologies.

Cultural considerations are also important.

o Business relationships are formal in nature and can take time to develop.

Meetings are an integral part of the business process.

o People often prefer to meet their prospective partners face-to-face.

Other challenges in the market include bureaucratic procedures, unclear legislation and a

lack of intellectual property rights enforcement.

Contact Austrade

To learn more about possible business opportunities for your products and services, get in

touch with Austrade Vietnam. Our advisers can discuss market entry pathways and help you

work out an action plan. We can also provide local market intelligence, assist you with your

market entry strategy, and help you get started in this fast-growing market.

o Shannon Leahy, Trade Commissioner, Austrade Vietnam ASEAN International Health

Lead. Tel: +84 24 3774 0318 Email: Shannon.Leahy@austrade.gov.au

o Nhung Tran, Business Development Manager, Austrade Vietnam Tel: +84 24 3774

0312 Email: Nhung.Tran@austrade.gov.au

SLIDES 8 and 9

Comparison of legislation – UK and US: Australia and Vietnam

Chinese Anti-Corruption Laws

China’s anti-corruption provisions are largely contained in the Anti-Unfair Competition Law of the

PRC and the Criminal Law of the PRC. China has long-held a tradition of gift giving, known as Guan Xi,

in all types of business transactions. The country has embarked on an aggressive anti-corruption

campaign, and strong enforcement is likely to continue in the coming years.

The Anti-Unfair Competition Law of the PRC

The Anti-Unfair Competition Law prohibits, inter alia, commercial bribery punishable by economic

and administrative sanctions. Serious offences may be subject to criminal investigation. Prohibited

acts of commercial bribery include giving bribes for the purpose of selling or purchasing goods, and

receiving bribes in the course of selling or purchasing. Fines range from RMB 100,000 to twice the

amount of the fine and illicit income is confiscated.

The Criminal Law of the PRC

The Criminal Law prohibits giving and receiving money or property – including cash, items

and proprietary interests – to obtain an undue benefit. Proprietary interests have been extended to

cover material interests such as provision of housing renovation, the release of debt or other

benefits such as membership services or travel. Bribery is distinguished by ‘official bribery’ (‘working

personnel of the State’) and ‘non-official bribery’ (‘personnel of state organizations not engaged in

public services’ or ‘working personnel of private companies’). Penalties for the offence of bribery

include fines and the confiscation of property and imprisonment and the death penalty. Companies

can be held liable for the bribery of state personnel or their close relatives. Commercial bribery is

prosecuted if the bribes exceeds RMB 60,000. Commercial bribery exceeding RMB 60,000 can result

in imprisonment of not less than three years, while bribes above RMB 2 million can result in a prison

sentence ranging from three to ten years.

Official Bribery Requirements

Involvement of ‘working personnel of the State’.

Value Threshold:

o Individual: RMB 10,000 – more than RMB 5 million.

o Company: RMB 200,000 or more.

Given in return for an improper benefit.

Non-Official Bribery Requirements

Involvement of ‘non- working personnel of the State’ or ‘working personnel of private

companies’.

Value Threshold:

o Company: RMB 60,000 – RMB 2 million or more.

Given in return for an improper benefit.

Anti-Unfair Competition Law (Full Text)

Criminal Law of the PRC (Full Text)

USEFUL RESOURCES:

China

https://www.globallegalinsights.com/practice-areas/bribery-and-corruption-laws-and-

regulations/china (2019 overview of PRC anti-corruption primary and secondary laws. Content is

copyright).

https://www.cliffordchance.com/content/dam/cliffordchance/hub/Risk/An_international_guide_to

_anti_corruption_legislation.pdf (March 2019 overview of several countries’ anti-corruption laws).

Vietnam

http://www.mondaq.com/x/835292/White+Collar+Crime+Fraud/Vietnam+Issues+New+Regulations

+Implementing+Its+AntiCorruption+Law+Effective+15+August+2019

https://www.lexology.com/library/detail.aspx?g=b8b2ee77-ede9-4888-bcd0-c4322f9ec7b6

https://www.lexology.com/library/detail.aspx?g=0d749e7e-0a1e-4b12-a2d4-18e4880bf49a

http://www.conventuslaw.com/report/vietnam-the-new-anti-corruption-law-and-its-impact/

United Kingdom

https://www.cliffordchance.com/content/dam/cliffordchance/hub/Risk/An_international_guide_to

_anti_corruption_legislation.pdf (March 2019 overview of several countries’ anti-corruption laws).

United States

https://www.cliffordchance.com/content/dam/cliffordchance/hub/Risk/An_international_guide_to

_anti_corruption_legislation.pdf (March 2019 overview of several countries’ anti-corruption laws).

https://www.ganintegrity.com/portal/anti-corruption-legislation/fcpa-foreign-corrupt-practices-act/

https://globalcompliancenews.com/anti-corruption/anti-corruption-in-the-united-states/

https://thelawreviews.co.uk/edition/the-anti-bribery-and-anti-corruption-review-edition-

7/1177241/united-states

SLIDE 10

Proposed reforms – anticipated for reintroduction

Purpose of the Bill

The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (the Bill) lapsed on 1 July 2019, after

being introduced to the Senate on 6 December 2017.

o The Bill is not to proceed in its current state, however given the purpose for the Bill being introduced in

the first place, the increase in international appetite for combatting foreign bribery and corruption, and

the debates and discussions that took place whilst the Bill was in play, it is likely that the Bill will be

reintroduced.

o It may be expected that this would occur in an amended form, however there is much that entities can

learn from the Bill (which is based on UK and US experiences), and the discussions related to it.

o There were some issues raised around the functionality of the Bill, and these are outlined below.

Bill’s purpose

The purpose of the Bill was to:

o Amend the Criminal Code Act 1995 (Criminal Code) to expand the scope of the existing foreign bribery

offence and introduce a new corporate offence of failing to prevent foreign bribery.

o Amend the Director of Public Prosecutions Act 1983 (DPP Act) to introduce a deferred prosecution

agreement scheme for serious corporate crime.

o Make consequential amendments to the Income Tax Assessment Act 1997, A New Tax System (Goods

and Services Tax) Act 1999, Administrative Decisions (Judicial Review) Act 1977 and the Crimes Act 1914.

Proposed reforms

The proposed reforms included:

o Expanding the definition of foreign public official to include candidates for office.

o Providing that the foreign bribery offence is about ‘improperly influencing’ a foreign public official

(replacing current language of a benefit being ‘not legitimately due’).

o Removing the requirement for a bribe to be provided, promised or offered so as to influence the foreign

public official in the exercise of his or her official duties.

o Expanding the foreign bribery offence to apply where a personal (as opposed to business) advantage is

sought.

o Clarifying that the advantage sought may be for someone other than the person providing, promising or

offering a bribe.

o Clarifying that the accused does not need to have specific business or a specific business advantage in

mind.

o Creating a new corporate offence of failing to prevent foreign bribery.

Deferred prosecution agreements

According to the Oxford Dictionary of Law Enforcement a deferred prosecution agreement (DPA) is an

agreement that:

o … charges will be laid but not proceeded with provided the organisation complies with a set of agreed

terms and conditions

DPAs can be set by the court based on the circumstances and what is appropriate.

In the UK some examples of what a DPA could include are:

o Pay to the prosecutor a financial penalty.

o Compensate victims of the alleged offence.

o Donate money to a charity or other third party.

o Disgorge any profits made from the alleged offence.

Evidential burden

The Scrutiny of Bills Committee1 recognised that the defendant will bear only an evidential rather than a legal

burden, but nonetheless stated that it expected any reversal of the burden of proof to be justified.

The Committee did not consider that the defence meets the criteria for offence-specific defences set out in the

Government’s Guide to Framing Commonwealth Offences, and requested the Attorney-General’s advice as to

why an offence-specific defence is proposed (as opposed to including the matter as an element of the offence).

The Attorney-General provided an explanation, including that the defendant would be in a better position to

point to evidence of a foreign law upon which they relied, however the Committee remained dissatisfied.

Preventing bribery of foreign public officials

It is not clear whether a body corporate that complies with guidance published by the minister would be

determined to have 'adequate procedures' in place or not. This means Ministerial guidance would effectively

determine the limits of criminal liability whilst not being a legislative instrument.

The Attorney-General has stated that the guidance will be principles based, and the limits will be a matter for the

courts.

The test is to be one of proportionality – whereby larger entities with exposure to potential foreign bribery risks

will be expected to have more measures in place than smaller entities that have less risk exposure.

o This approach provides flexibility but a lack of certainty.

Facilitation payments

The Bill 2019 did not propose amendments to the facilitation payments defence.

Notwithstanding - the Senate Economics References Committee that considered the Bill recommended that the

facilitation payment defence (subsection 70.4 of the Criminal Code, and subsections 26-52(4) and 26-52(5) of

the Income Tax Assessment Act 1997) be abolished over a transition period, to enable companies and individuals

to adjust their business practices and procedures to comply with the law as amended.2

1 Scrutiny of Bills Committee, Scrutiny digest, 1, 2018, p. 18. 2 Senate Economics References Committee, Report on Foreign Bribery, 28 March 2018 https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Foreignbribery45th/Report/c07b

SLIDE 12

Adequate procedures

Decisions in the UK and US have considered what constitutes ‘adequate procedures’ to prevent the

commission of a bribery offence and these cases provide useful within the Australian context.

UK

• R v Skansen Interiors Ltd, unreported, Southwark Crown Court (2018);

• R v Sweett Group pls, unreported;

• Serious Fraud Office v Rolls-Royce plc (Rolls-Royce Energy Systems Inc), 2017 WC2A 2LL;

• Serious Fraud Office v Standard Bank plc (now known as ICBC Standard Bank), 2015 WC2A

2LL; and

• Serious Fraud Office v XYZ Limited, 2016 WC2A 2LL.

US

The Foreign Corrupt Practices Act 1977 does not have a provision which expressly prohibits the

failure to prevent bribery. However, there have been US cases that have held companies liable for

failing to prevent bribery under other Acts:

• Securities and Exchange Commission v Archer-Daniels-Midland Company; and

• Securities and Exchange Commission v Oracle Corp

The guidance material from the US and the UK1 identify factors that are relevant to determining

whether or not a company has taken ‘adequate steps’ to prevent the commission of a bribery office

by their associates.

Key guidance

Skansen

From the UK’s R v Skansen Interiors Ltd (Skansen)2 case, comments made by the prosecution and

the UK’s Serious Fraud Office (SFO) provide some guidance on how to assess whether procedures

are adequate. Key takeaways include the following:

Top level commitment: a company's compliance function must be seen to have the backing

and oversight of the Board.

o Even small companies with no compliance function will be expected to assign

compliance responsibility to a senior employee.

Implementation: the starting point is to have bespoke compliance policies in place,

1 These are, respectively, the Ministry of Justice (UK), The Bribery Act 2010 Guidance; the US Department of Justice and US Securities and Exchange Commission, A Resource Guide to the US Foreign Corrupt Practices Act; and International Standard Organisation, Anti-bribery management systems - requirements with guidance for use – ISO 37001. 2 R -v- Skansen Interiors Limited (unreported), February 2018, Southwark Crown Court UK

o But those policies will be of no use if a company cannot show effective

communication of those policies to staff.

Document compliance and record your response to issues:

o A company will be well served by regularly recording compliance discussions or

steps taken in response to issues.

o Without these records, it will be very difficult to convince a jury or enforcement

authority that procedures are adequate.

Monitoring and review:

o Companies should be periodically reviewing their policies and procedures to ensure

they are still fit for purpose.

o Skansen failed to resist prosecution partly because it was unable to show what steps

it had taken following the introduction of the UK Bribery Act 2011, nor could it show

that it had sufficiently reminded staff of its ethics policy.

o Ensuring these mistakes are not made in your organisation is a simple way to

improve ABC compliance.

Check your policies against the statutory guidance:

o the Ministry of Justice has published easy-to-follow guidance on what constitutes

adequate procedures.

o Taking the time to review your policies against this guidance — and recording that

you have done so — is another simple step towards improving your organisation's

anti-bribery and corruption (ABC) compliance.

Further US and UK takeaways

Recognition of higher risks in some jurisdictions:

o If corporations are operating in jurisdictions that have more significant bribery risks,

this should be factored into the corporation’s anti-bribery approach in order for the

corporation to be considered to have ‘adequate procedures’.

Subsidiaries – Both UK and US cases indicate that parent companies may be liable for

bribery related actions of their subsidiaries.

o These cases also identify that subsidiaries will not be able to rely solely upon their

parent company’s antibribery procedures.

o Both subsidiaries and parent companies need to take responsibility for their own

anti-bribery procedures, policies and strategy.

Independent reports – the cases indicate that it might be a valuable exercise for

corporations to engage an independent third party to evaluate the corporations’ operations

and compliance with anti-bribery obligations.

o However, a corporation must be willing to respond to the findings of the

independent report.

o If a report shows problems with the corporation’s approach to anti-bribery

obligations – and the corporation does not attempt to remedy the issues – this will

indicate that a corporation does not have adequate procedures in place.

SLIDE 13

To whom does the offence apply – and am I liable for my agent’s

conduct?

The offence applies to:

o conduct in Australia, or

o on board an Australian aircraft or an Australian ship.

The offence also applies to conduct outside Australia where, at the time of the alleged

offence, the perpetrator is:

o an Australian citizen

o a resident of Australia, or

o a body corporate incorporated by, or under a law of, the Commonwealth or of a

State or Territory.

A company be held criminally responsible for the conduct of a corporate agent and their

employees.

Companies will be liable for foreign bribery offences where:

o the company’s board of directors, or a high managerial agent of the company:

intentionally, knowingly or recklessly committed the foreign bribery offence

expressly, tacitly or impliedly authorised, or permitted the commission of,

the foreign bribery offence by an agent of the company

o an agent of the company offered a bribe and it is shown that:

a corporate culture existed within the company that directed, encouraged,

tolerated or led to the commission of the foreign bribery offence, or

the company failed to create and maintain a corporate culture that required

compliance with the laws against bribing foreign public officials.

o Companies must:

create and maintain a corporate culture that requires compliance with the

law or they may face increased liability for the corrupt activities of company

officers and agents.

take reasonable steps to ensure that their employees do not commit foreign

bribery offences.

ensure that they have appropriate channels for reporting suspected

breaches of the law and that people who do report breaches are protected

from persecution within the company.

Corporate criminal liability is detailed in Division 12 of the Criminal

Code Act 1995 (Cth).

SLIDE 15

Facilitation payments – a limited defence

Two defences to the Australian foreign bribery offence

Permitted by applicable law

The advantage was permitted or required by the written laws that govern the foreign public

official.

This defence applies where a written law governing the foreign public official expressly

permits or requires the benefit to be given.

Facilitation Payments

A facilitation payment is a minor payment made to a foreign public official for the purpose of

speeding up minor routine government action.1

o Such a payment is legislatively recognised in Australia as a complete defence to the

core foreign bribery offence in the Criminal Code Act 1995 (Criminal Code).

o The defence can apply where the benefit:

is of ‘of a minor value,’

the benefit was offered ‘for the sole or dominant purpose of expediting or

securing performance of a routine government action of a minor nature’,

AND

the person made a record of the payment as soon as practicable afterwards.

o It can be difficult to differentiate between a facilitation payment and a bribe.

Status of facilitation payments internationally

The fate of facilitation payments is currently in a state of flux.

There is a strong international movement towards the complete removal of the payment

structure.

o The OECD permits the payments.

o International instruments such as the United Nations Convention against Corruption

(UNCAC), a multilateral treaty ratified in Australia, prohibits them. 2

o The UNCAC is repeatedly recommending that Australia take steps to review the

approach taken to facilitation payments by encouraging companies to discontinue

their use.

o Echoing the UNCAC, the OECD now strongly urges Australian companies to “prohibit

or discourage” the use of facilitation payments by policies and procedures which

1https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Foreignbribery45th/Report/footnotes#c07bf1 2 United Nations Convention against Corruption, Article 16.1, https://www.unodc.org/ documents/brussels/UN_Convention_Against_Corruption.pdf (accessed 11 August 2019).

encourage ethical and compliant behaviour, but the ‘facilitation payment defence’

remains in the Criminal Code and can be relied on.3

The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (the Bill) that

lapsed on 1 July 2019 did not propose amendments to the facilitation payments defence.

The Senate Economics References Committee that considered the Bill recommended that

the facilitation payment defence (subsection 70.4 of the Criminal Code, and subsections 26-

52(4) and 26-52(5) of the Income Tax Assessment Act 1997) be abolished over a transition

period, to enable companies and individuals to adjust their business practices and

procedures to comply with the law as amended.4

o It may be anticipated that when the bill is reintroduced this defence will be removed

or amended, with or without a transition period.

What is a ‘routine government action’?

A ‘routine government action’ does not include:

o any decision to award or continue business

o any decision related to the terms of new or existing business.

Record keeping

To be considered a legitimate facilitation payment, detailed records must be kept

(subsection 70.4(3)) including:

o the value of the benefit concerned,

o the identity of the foreign official and the person receiving the benefit, and

o particulars of the routine government action sought.

Breach of foreign laws

Even if a benefit constitutes a legitimate facilitation payment under Australian law, people

making these payments may be liable for bribery under the laws that govern the foreign

public official.

The Australian Government recommends that individuals and companies make every effort

to resist making facilitation payments.

Refusal to make a facilitation payment – will I be disadvantaged?

A growing body of research and the experiences of a growing number of major companies

demonstrate that businesses can achieve net gains by refusing to make payments.

The Australian Government acknowledges that this can be a difficult position to take due to:

o short-term risks for business

o increased difficulty for smaller businesses that may feel they lack the bargaining

power of major companies.

3 https://www.complispace.com.au/blog/financial-services-updates/foreign-bribery-part-three-is-the-new-crimes-legislation-amendment-combatting-corporate-crime-bill-the-last-piece-of-the-anti-bribery-and-corruption-puzzle-in-australia-2/ 4 Senate Economics References Committee, Report on Foreign Bribery, 28 March 2018 https://www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/Foreignbribery45th/Report/c07b

The Australian Government is committed to global efforts to reduce corruption and to

supporting Australian businesses seeking to eliminate payments to officials.

Examples of facilitation payments

Referred to as “speed money”, “grease payments” or “oiling the wheels”:

o Passport clearance at frontiers

o Access to the ‘fast lane’

o Help speed up issue of documents

o Port entry for vehicles

o Release of goods from customs

o Loading and unloading cargo

o Obtaining services such as telephone, power, water, mail collection

o Processing work permits

o Planning permissions

How do I say no?

Resist paying

Request to speak to a supervisor

Document any payments

Get legal advice

Report the request for payment to Australian Federal Police

Contact Austrade

Contact Austrade

Shannon Leahy, Trade Commissioner, Austrade Vietnam ASEAN International Health Lead.

Tel: +84 24 3774 0318 Email: Shannon.Leahy@austrade.gov.au

Nhung Tran, Business Development Manager, Austrade Vietnam Tel: +84 24 3774 0312

Email: Nhung.Tran@austrade.gov.au

SLIDE 17

Reporting foreign bribery - and what if I fail to report it?

All incidents of suspected bribery of foreign public officials should be reported to the

Australian Federal Police (AFP) (not state or territory police).

All information relating to incidents of suspected foreign bribery should be reported to the

AFP, either verbally or in writing.

Information you provide may supplement other information provided to the AFP and assist

an investigation.

You may be asked:

o If the activity is ongoing or has ceased

o details of the suspected offender(s) – name, date of birth, location

o a chronology of the suspected criminal activities

o if the suspect(s) is aware of the allegation

o details of any witnesses

o criminal history

o information relating to the circumstances where the person(s) has previously come

to attention

o significance or impact of the matter

o value of the revenue loss or potential loss at risk

o a summary of any enquiries already undertaken

o how the activity is suspected of breaching the Criminal Code Act 1995 (Cth)

o copies of any relevant documentation, and

o copies of any relevant legal advice.

If your suspicions are incorrect it is not an offence to report suspected criminal activity to

the AFP

o it is important that you do not make a report which is vindictive or malicious,

knowing that what you are alleging is incorrect. There are offences that may relate

to reports made under these circumstances.

The AFP will not provide details of who made an allegation to the alleged offender.

o if the mater goes to court the Commonwealth DPP will provide the full brief of

evidence to the defence counsel (including the information you provided).

o You may be required to give evidence in court

Failure to report:

o If an individual discovers foreign bribery and does not report it to police there is no

criminal penalty.

o Companies that discover evidence or strong suspicions of foreign bribery and do not

report it may face increased liability for maintaining a corporate culture that

tolerates bribery.

You can report bribery matters:

o online at the AFP website , following the ‘Reporting a Commonwealth Crime to the

AFP’ link.

o Telephone referrals should be directed to the AFP Operations Monitoring Centre

(OMC)

in Canberra on (02) 6126 7777

from outside Australia on +61 2 6126 7777

write to Australian Federal Police, GPO Box 401, Canberra, ACT 2601,

Australia

Call Crime Stoppers on 1800 333 000

AFP overseas through Office of Major Crime or a Liaison Post

Information can be provided to Australian embassies in foreign

countries, who will forward it to the AFP

SLIDE 21

Liability under foreign laws

Nearly all countries have criminal laws against bribing domestic officials and a growing

number of countries have laws against bribing foreign officials.

Bribery by an Australian company or individual of an official in a foreign country may give

rise to liability under the laws of that country.

Australian companies and businesses may also be liable under anti-corruption laws of third

party countries that have jurisdiction over the offending conduct.

For example, the extended jurisdiction of the United States Foreign Corrupt Practices Act of

1977 includes businesses that issue registered securities under US law.

o This extended jurisdiction has enabled the US to prosecute non-US companies and

individuals for actions outside the US including:

mobile phone manufacturer Siemens, which in 2008 was fined a record

US$1.6 Billion in the US for corrupt activity in Europe.

People considering whether or not a payment to a foreign official is lawful:

o Should consider a wide range of potential liabilities,

o prosecution in multiple countries,

o should take all appropriate steps to ensure neither they nor their employees or

agents engage in bribery.

Slide 27

BUSINESS PARTNER QUESTIONNAIRE

This Business Partner questionnaire is intended to assist [Name Company] in collecting information about potential Business Partners to ensure compliance with [Name Company]’s policies and applicable laws, including anti-corruption laws.

Instructions

Please provide complete answers to the questions and information requests below.

If additional space is required, attach the complete answer on a separate page.

Include all requested documents/information when you return the form to your [Name Company] contact.

Address any questions to your [Name Company] contact.

For the purposes of this form, “Government Official” includes:

o officers or employees of government, government departments or government agencies

o officers or employees of government-owned or controlled entities including state owned companies

o officers or employees of a public international organisation

o political parties, political party officials, or candidates for public office

o individuals who hold or perform the duties of an appointment, office or position created by custom or convention

o people who hold themselves out to be the authorised intermediary of a government official

For the purposes of this form, “Person who Represents Others” means:

Individuals who represent other people, perform activities on behalf of a body of people, or owe duties of trust to a broader group of people, including:

o Union leaders

o Community leaders

o Indigenous leaders

o Heads of stakeholder groups and their agents or representatives

For the purposes of this form, “Close Relative” means:

o parent, spouse/partner, child, or sibling of that person; or

o parent, child or sibling of the spouse/partner of that person.

BUSINESS PARTNER QUESTIONNAIRE

Page 2 of 6

1. Company Information

In this Questionnaire, “Company” refers to the individual or entity being considered as a [Name Company] Business Partner. Please provide full answers or not applicable (N/A) as appropriate.

Legal Name of Company: Including Any Suffix

(e.g. A.S, Pty Ltd, Inc etc)

Full Business Address: (principal place of

business and address for purposes of communications with [Name Company])

Place of Incorporation: TBC

Parent Company or Corporate Headquarters and Address:

TBC

Country of Bank Account to Receive Payment for Service and the Name on the Bank Account:

TBC

Type of Business: (Type of Legal Form) Individual

Corporation

Partnership

Other (If Other, please specify here): Australian Government

2. Company – Primary Contact Information

This should be [Name Company]’s primary contact at your Company.

Name:

Position:

Business Address:

Email:

Direct Telephone Number:

3. Business Information

Please ensure that you provide the following documentation:-

I. Documents evidencing the establishment or incorporation of your Company.

II. Please provide copies of registrations or other documentation authorising you to operate in the countries of intended activity for goods or services provided to [Name Company].

How many years has the Company been Operating?

Less than 2 years

2 to 5 years

More than 5 years

BUSINESS PARTNER QUESTIONNAIRE

Page 3 of 6

Approximate number of Employees: 1000

Principal lines of business and state whether each line of business has been offered for more than 2 years:

The Australian Trade & Investment Commission is the Australian Government’s agency for the promotion of trade & investment

Provide a List of Countries where your Company is doing Business:

TBC

Approximate annual revenue in the last five years:

Less than 1 million US Dollars (“USD”)

USD 1 to 10 million

USD 10 to 50 million

USD Over 50 million

4. Business Ownership

Please ensure that you provide the following documentation in relation to this section:

Are any shares in your Company or Parent Company listed on a stock exchange?

No

Yes Percentage of total shares which are listed:

Stock exchange(s) on which shares are listed:

Identify in the table below all of the owners of shares in the Company that are not listed on a stock exchange, whether companies or individuals.

If a business entity (corporation, partnership, LLC, etc.) owns any portion of the Company, please trace ownership of all such entities back through as many layers as is necessary to identify all ultimate individual owners of such entities. (Attach additional pages or a corporate structure diagram if necessary).

Individual or Company Name Citizenship or Country of Incorporation

Percentage of Ownership

Not applicable

BUSINESS PARTNER QUESTIONNAIRE

Page 4 of 6

Do any other individuals have a beneficial interest in the Company or in its revenues or profits? (“Beneficial” interest means the direct or

indirect sharing in voting power in the Company or investment power (power to sell an ownership interest in the Company).

Yes

If yes, please identify the individuals here.

No

5. Business Management

Provide the following information for all officers, directors, partners or other individuals with executive or management authority of the Company.

Name Position Citizenship

6. Services Provided to [Name Company]

If retained, please describe the services your Company will provide to [Name Company] and the countries in which the services will be provided?

Our agency will identify options

Will your Company interact with any Government Officials or People who Represent Others as part of the services?

Yes If yes, provide details: The agency will be in contact with multiple government officials across multiple agencies. A stakeholder engagement map clarifying outreach is attached.

No

Will your Company use cash payments in connection with the services to be provided to [Name Company]?

Yes If yes, provide details:

No

If engaged, do you plan on using any third parties (whether subcontractors, agents or others) to provide services to [Name Company]?

Yes If yes, provide details, including names of third parties and services they will provide:

No

Has your Company or any of its affiliates ever before provided services to [Name Company]?

Yes If yes, specify where, to which [Name Company] entity and the general services provided:

No

BUSINESS PARTNER QUESTIONNAIRE

Page 5 of 6

Provide the names of i) any employees who will be interacting with Government Officials or People who Represent Others on behalf of [Name Company]; ii) any employees who will be managing other employees who will be performing services on behalf of [Name Company]; and iii) any employees who will be managing third parties performing services on behalf of [Name Company].

Name Title and Role e-mail address

Do you provide periodic anti-corruption training to employees and do all persons listed in Section 6 above have current up-to-date training?

Yes If Yes, please provide details of your anti-corruption training program:

All employees of the agency are required to undertake

No

7. Government or Representative Relations

Are any directors, officers, partners, direct or indirect shareholders of the Company or individuals identified in Section 6 of this Questionnaire:

1. Current or Past Government Officials or their Close Relative?

2. Current Person who Represents Others or their Close Relative?

Yes

No

If any answer is yes, provide details:

Full name and, if a relative, the relationship to the Company person:

All are current government officials.

Affiliated/employing entity, position and responsibilities:

Dates of service (current or past):

BUSINESS PARTNER QUESTIONNAIRE

Page 6 of 6

8. Company’s Prior Issues

In the past five years (5) years has the Company (including any affiliated entities or any predecessor organisation) or any owner, officer, director, employee or third party who will be performing services or managing those performing services for [Name Company] or who has decision making authority related to the services provided to [Name Company] been subject to any investigation or allegation of fraud, misrepresentation, bribery, corruption, money laundering, false accounting, tax evasion, trade sanctions, export controls or other related activities in any country?

Yes

If yes, provide complete details:

No

Please provide any additional information that you believe might be helpful during [Name Company]’s due diligence of your Company.

Some of the information that [Name Company] receives from your company in connection to this Questionnaire and other due diligence data may include “personal data,” defined as any information relating to an identified or identifiable natural person. Furthermore, [Name Company] intends to import the personal data into other countries which may include the United States for evaluation under anti-corruption laws. The data will not be used for other purposes.

To the extent that any personal data initially collected and processed by your company but eventually transferred to [Name Company] relates to third parties, your company should duly inform these third parties of their rights under applicable data privacy laws, and obtain their unambiguous consent in writing with regard to such processing and/or subsequent transfer. By completing this form and returning to [Name Company], you confirm your consent to [Name Company]’s use of the personal data for the purposes stated above.

9. Certification

The undersigned, being duly authorised to execute this form and to certify as to the matters set forth herein, certifies that all information is correct and complete.

Name and Title:

Signature:

Date:

Slide 27 BUSINESS REFERENCES

Page 1 of 1

Business References

Please provide contact details for two business referees (preferably customers) who are willing to provide information with regards to your company’s general standing, ethical behaviour and reputation. [Company] or its chosen due diligence provider may contact your referees. The referees should have a substantial history with your company and they should not be relatives of Company employees.

Business Reference # 1:

Legal Name of Company: Including Any Suffix (e.g. A.S, Pty

Ltd, Gmbh, Inc etc)

Full Business Address: (principal place of business and address

for purposes of communications with [Company], if different from the principal place of business)

Contact Person and Position:

Relationship to the Company:

E-Mail Address:

Telephone Number:

Business Reference # 2:

Legal Name of Company: Including Any Suffix (e.g. A.S, Pty

Ltd, Gmbh, Inc etc)

Full Business Address: (principal place of business and address

for purposes of communications with [Company], if different from the principal place of business)

Contact Person and Position:

Relationship to the Company:

E-Mail Address:

Telephone Number:

Slide 27

Information for Clients

Key steps in creating an AB policy and response to bribery when doing business.

Leadership. A policy and compliance program must be built on sound ethical values driven from the top of an organisation.

Risk Assessment. There must be formal processes for assessing the risk of doing business in all represented markets.

Standards & Controls. Written policies and procedure must be identifiable by internal staff and external law enforcement. This also impacts the assessment whether a ‘culture’ of inadvertence existed within an organisation.

Training & Communication. To make sure the message is getting through

Monitoring, Auditing and Response. The day-to-day management of the risks including reporting on foreign bribery

Disclaimer

It is important to note that any guidance an anti-bribery policy is non-binding, informal, and summary in nature and does not constitute either rules or regulations and may not be relied upon to create any rights, substantive or procedural, that may be relied upon in any criminal, civil or administrative matter. Any guide must therefore be read in that context and should not be relied upon any further than that. It does not replace independent legal advice. The purpose of this guide is “to provide businesses and individuals with information to help them abide by the law, detect and prevent violations of the law and implement effective compliance programs.”

Introduction:

Australian anti-bribery law has extra territorial effect and applies to Australian individuals and businesses. Such individuals and entities are prohibited from making corrupt payments to foreign officials to obtain or retain business.

Guidance on Third-Party Contracts

Australian law prohibits corrupt payments made through third parties or intermediaries to foreign public officials. Common “red flags” for bribery, associated with third parties include:

excessive commissions to third-party agents or consultants;

unreasonably large discounts to third-party distributors;

third-party “consulting agreements” that include only vaguely described services;

the third-party consultant is in a different line of business than that for which it has been engaged;

the third party is related to or closely associated with the foreign official;

the third party became part of the transaction at the express request or insistence of the foreign official;

the third party is merely a shell company incorporated in an offshore jurisdiction; and

the third party requests payment to offshore bank accounts.

What is a “Foreign Official”?

Anti-bribery provisions apply broadly to corrupt payments made to any officer or employee of a foreign government and to those acting on the foreign government’s behalf. It’s not always clear, though, who qualifies as an officer or employee of a government, particularly in countries where governments operate through state-owned and state-controlled entities.

Authorities such as the AFP use an analysis of “ownership, control, status, and function” to determine whether a particular entity is an agency or instrumentality of a foreign government. No single factor is determinative, but as a practical matter an entity generally does not qualify as an instrumentality if a government does not own or control a majority of its shares. There have been circumstances, though, in which an entity did qualify as an instrumentality absent 50% or greater government ownership. For instance, where Malaysia’s Ministry of Finance owned 43% of a Malaysian telecommunications company, the company was nonetheless considered an instrumentality of the Malaysian government because the Ministry was entitled to exercise control over the company’s important operational decisions.

Gifts, Business Travel and Hospitality

Broadly speaking, Australian law prohibits providing money or anything of value to a foreign official in order to influence a foreign official in his or her official capacity. Many things may constitute “anything of value” under the Act. The Guide notes that an improper benefit can take many forms—not just cash (including payments in the form of “consulting fees” or “commissions” given through intermediaries as discussed in the preceding section), but also travel expenses and expensive gifts.

The examples that the Guide gives underline that there is no problem with legitimate, bona fide expenditure made in connection with the promotion, demonstration, or explanation of a company’s products or services and which suggest no corrupt intent. The law does not prevent companies from promoting their businesses or providing legitimate hospitality, including to foreign officials. So, by way of example, the provision of promotional items with company logos or free snacks at a trade show is an appropriate means of providing hospitality and promoting business. There should be no issue with providing reasonable gifts to foreign officials as tokens of esteem or gratitude. It is important, however, that such gifts be made openly and transparently, properly recorded in a company’s books and records, given only where appropriate under local custom, and reasonable for the occasion. Also, legitimate costs associated with training or a trip for senior officials to inspect facilities would not violate the law provided such costs are reasonable and bona fide promotional expenditure, or are otherwise for a legitimate business purpose. The payment of expenses associated with, for example, a review of the execution and performance of a contract, would be a legitimate business purpose. Even the provision of business class airfare may be reasonable in that scenario, as would be the payment of the costs of meals and entertainment, provided these are a component of the business trip. However, at the other end of the scale, payment of first class airfares for officials and their spouses, including an “all expenses” paid trip to a destination where the company has no facilities would almost certainly violate the law because it evinces a corrupt intent. If such a trip does not appear to be designed for any legitimate business purpose, is extravagant, and includes expenses for the officials’ spouses, it would have the appearance of being designed to corruptly curry favour with the foreign government officials. Moreover, if such a trip were recorded as a legitimate business expense there would also be a violation of Australian false accounting laws.

Guiding Principles of Enforcement

Whether and how the AFP will investigate and determine whether to charge a corporation may include::

the nature and seriousness of the offense, including the risk of harm to the public;

the pervasiveness of wrongdoing within the corporation, including the complicity in, or the condoning of, the wrongdoing by corporate management;

the corporation’s history of similar misconduct, including prior criminal, civil, and regulatory enforcement actions against it;

the corporation’s timely and voluntary disclosure of wrongdoing and its willingness to cooperate in the investigation of its agents;

the existence and effectiveness of the corporation’s pre-existing compliance program;

the corporation’s remedial actions, including any efforts to implement an effective corporate compliance program or improve an existing one, replace responsible management, discipline or terminate wrongdoers, pay restitution, and cooperate with the relevant government agencies;

collateral consequences, including whether there is disproportionate harm to shareholders, pension holders, employees, and others not proven personally culpable, as well as impact on the public arising from the prosecution;

the adequacy of the prosecution of individuals responsible for the corporation’s malfeasance; and

the adequacy of remedies such as civil or regulatory enforcement actions.

Similar factors guide ASIC when determining whether to open an investigation and, if so, whether an enforcement action is warranted. These include:

the statutes or rules potentially violated;

the egregiousness of the potential violation;

the potential magnitude of the violation;

whether the potentially harmed group is particularly vulnerable or at risk;

whether the conduct is ongoing;

whether the conduct can be investigated efficiently and within the statute of limitations period; and

whether other authorities, including federal or state agencies or regulators, might be better suited to investigate the conduct.

In addition to these “objective” factors, ASIC may also consider whether the case involves a possibly widespread industry practice that should be addressed, whether the case involves a recidivist, and whether the matter gives ASIC an opportunity to be visible in a community that might not otherwise be familiar with ASIC or the protections afforded by the securities laws.

The Importance of an Effective Compliance Program

Key to avoiding falling foul of the Australian anti-bribery law is instituting and maintaining an effective compliance program. The authorities evaluate what constitutes an adequate compliance program on a case-by-case basis. The approach is based on common sense, pragmatic considerations and is informed by three basic questions:

Is the company’s compliance program well designed?

Is it being applied in good faith?

Does it work?

And in adapting a training program

TI UK has now put its training materials online, as an e-learning module. The course is available at www.doingbusinesswithoutbribery.com

1

Austrade’s Mission Statement on Bribery and Corruption

“Austrade’s position on bribery and corruption is one of ‘zero tolerance’. Austrade staff and

Austrade’s clients must conduct all business in an honest and ethical manner and should be

committed to acting professionally, fairly and with integrity in all business dealings and

relationships. Staff are bound to this standard by APS standards and Codes of Conduct.

Clients must implement and enforce effective systems to counter bribery. This would include

not permitting the making of any inappropriate promises, gifts or excessive hospitality to

Foreign Public Officials in order to achieve unfair advantage or benefit. Resisting any efforts

made by others (incl. existing or potential suppliers, customers or clients) to unfairly affect

any official decision making process in order to achieve unfair advantage or benefit.

Austrade will always report and document any breach of the law that is brought to its

attention, through the reporting mechanism provided by Australian authorities. Austrade

does not encourage contributions to political parties. Austrade encourages charitable

donations when they are ethical and legal under local laws and practices. Austrade does not

encourage facilitation payments as a means of doing business and will not assist a client in

making such payments. Clients found to have contravened Austrade’s position on bribery will

be ineligible for Austrade services”

David Tonkin

Chief Legal Counsel

October 2019