Australia’s current government has achieved greater anticorruption reform than its predecessor by a considerable margin. In July 2023, it delivered on a key election promise to establish a National Anti-Corruption Commission, an independent agency charged with investigating public corruption. In March 2024, it passed the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2023, the most significant reform to the Australian foreign bribery regime since its introduction in 1999. The amendment makes significant changes that broaden and strengthen Australia’s anti-foreign-bribery law. Perhaps the most significant change of these changes is the introduction of a new corporate offence of failing to prevent foreign bribery, closely modeled on a similar offense contained in the UK Bribery Act (UKBA). Once Australia’s new law comes into force later this year, a corporation can be held criminally liable if it fails to prevent an “associate” from paying a bribe to benefit the corporation. This offence is predicated on an underlying violation of the federal foreign bribery offence, which means that the prosecution must still establish that the associate acted with the intent to influence a foreign official. If the prosecution makes this showing, the burden shifts to the corporate defendant to show that it had in place adequate procedures to prevent bribery. (Unlike the UKBA, however, Australia’s new failure-to-prevent-bribery offense applies only to failure to prevent bribery of foreign officials or candidates for foreign public office; the UKBA offense applies to failure to prevent any sort of bribery, including domestic and private bribery.) Looking more closely at the details of the new offense demonstrates that the scope of potential liability is indeed quite broad:

• For one thing, an “associate” is defined to include not only a corporation’s officers, employees, agents, subsidiaries, and persons under its control, but also persons who “otherwise perform services for or on [its] behalf.” That last phrase, which also appears to have been taken from the UKBA, is appears to be remarkably broad and will likely be the subject of future litigation. Additionally, the failure-to-prevent offense does not require the associates to be acting within the actual or apparent scope of their authority; as long as they had the requisite intent to pay the bribe for the corporation’s “profit or gain,” the corporation can be held liable. The government has defended the breadth of potential liability for associate’s misconduct on the grounds that it will prevent companies from distancing themselves from transactions, and will encourage companies to undertake due diligence into their business partners and supply chains.
• While the new Australian legislation, like the UKBA model, includes an “adequate procedures” defense, this defense is less generous than the previous law, which allowed corporations to escape criminal liability for their employees’ wrongful acts if the corporation could show it had exercised “due diligence.” The new standard appears to be more demanding and case-specific. The business community and the corporate defense bar had lobbied for the more defendant-friendly language of “procedures reasonable in all the circumstances”, but the Government opted for the more stringent “adequate procedures”.

Australia’s new failure to prevent offence simultaneously moves the law closer to the UKBA, while also shifting the standard for ascribing criminal liability to corporations closer to a US-style “strict liability” approach. There is, however, at least one respect in which Australian law stands apart:  prosecutors cannot settle foreign bribery cases with corporate defendants through deferred prosecution agreements (DPAs). During the debates leading up to the enactment of the new amendments, some voices called for the inclusion of a DPA mechanism as part of the changes. The unsuccessful reform proposals introduced by the previous Australian Government in 2017 and 2019 included a DPA mechanism, and such a mechanism was also endorsed by the Australian Law Reform Commission Report released in April 2020. Transparency International Australia also weighed in on this issue, suggesting that Australia should adopt a DPA model that abets the prosecution of individual corporate officers, and requires corporations to admit guilt.

The Australian Government has indicated its openness to introducing that mechanism in the future, now that the substantive law has been reformed—but the Attorney General has signaled some skepticism of the DPA mechanism, commenting:

When ordinary Australians commit crimes, they feel the full force of the law. However, under the deferred prosecution agreement scheme proposed by the former government, companies that engaged in serious corporate crime, including foreign bribery, would have been able to negotiate a fine, agree to a set of conditions and have their cases put on indefinite hold.

The Attorney General’s hesitance is warranted. DPAs are the subject of significant criticism, as they allow corporations to forego conviction, and there is limited evidence they actually deter future offending (see here, and here, for example). Jed Rakoff, a Senior Judge of the United States District Court for the Southern District of New York, has remarked that DPAs generate headlines while allowing for a “façade of enforcement.” Moreover, once DPAs are adopted, there is a real possibility they will consume the Australian corporate enforcement landscape. In the United States, DPAs are ubiquitous in Foreign Corrupt Practices Act enforcement. The OECD has noted that the United States concludes over 95% of foreign bribery enforcement actions through this mechanism. The decision to adopt DPAs should not be taken lightly, and if Australia is to combine its new foreign bribery provisions with DPAs, it should first observe the operation of those provisions, and take the time to craft a DPA regime that is tailored to its needs. In short, the federal Government’s measured and piecemeal approach to reform will prove to be a wise one.

While the new amendments are encouraging, the question now is whether Australia will implement the law effectively. The success of Australia’s new regime will lie in well-resourced enforcement agencies, the sound exercise of prosecutorial discretion, and sustained political commitment toward improving statutory infrastructure and enforcement practices. A few convictions wouldn’t hurt either.