Bribery and corruption are important focus areas for business to demonstrate their ability to act ethically and to do the right thing. We set out five key trends in anti-bribery and corruption (ABC) for Australian businesses to watch out for in 2019. These trends are likely to lead to increased reporting of alleged corrupt conduct and greater enforcement activity.
Absolute liability for bribery offences
The Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017 (Cth) (Bill) introduces a new absolute liability offence for corporates of ‘failure to prevent bribery of foreign public officials’. Because this will be an absolute liability offence, the prosecution will not be required to establish that a company intended to commit the offence. This is likely to significantly reduce the barriers to prosecuting corporations for foreign bribery offences that are currently in place.
If, as is expected, the Bill passes in 2019, this will align Australia with a number of other jurisdictions that have recently introduced similar absolute liability offences for failure to prevent bribery, such as the UK (in 2011), Brazil (in 2014), India (in 2018), Malaysia (in 2018), and Ireland (in 2018). Other countries may follow suit in 2019.
Cooperation and self-reporting
2019 is likely to see increased levels of cooperation and self-reporting of potential bribery and corruption incidents by companies. In Australia, Australian Federal Policy (AFP) and the Commonwealth Director of Public Prosecutions (CDPP) guidelines for self-reporting of potential foreign bribery and related offences have been in place for over a year. They are likely to be supplemented by the anticipated Deferred Prosecution Agreement (DPA) regime provided for by the Bill. To be eligible for a DPA, companies will need to cooperate proactively with investigations and, in most instances, will need to have self-reported the conduct to be eligible for a DPA. DPAs originated in the US, and similar regimes have recently been adopted in the UK, Canada, France and Singapore. Japan and Ireland are also considering introducing DPA regimes. In the US, companies that self-report potential foreign bribery offences now obtain the benefit of a rebuttable presumption that those offences will not be prosecuted.
In the aftermath of the Financial Services Royal Commission and APRA’s CBA Prudential Inquiry Final Report cooperation and self-reporting is likely to become the norm in corporate Australia generally, and this will extend to incidents of potential bribery and corruption. The proposed reforms to Australian whistleblower laws are also likely to result in increased self-reporting of such incidents.
Greater enforcement activity
Both the AFP and CDPP have received increased funding to pursue corporate crime, as have other authorities such as ASIC and AUSTRAC. This follows a global trend of increases in resources and powers for regulators with jurisdiction over ABC. With broader offences, a likely increase in self-reporting and whistleblower reporting, and a greater array of enforcement tools at their disposal, we expect to see more ABC enforcement against both corporates and individuals.
Focus on compliance and culture
Australian businesses can expect an increased focus from Australian and overseas authorities on culture and compliance practices and frameworks, both in relation to ABC and more broadly. In part, this is driven by the need to have compliance programmes in place under certain ABC laws. It can also afford a company a defence to an offence of failure to prevent bribery, or be a factor that weighs against prosecution.
The draft fourth edition of the ASX’s Corporate Governance Principles and Recommendations, due to be adopted in early 2019, also recommends that companies adopt and publish whistleblower and anti-bribery policies.
More broadly, community and regulatory expectations in relation to compliance and corporate culture have matured, both in Australia and internationally. In Australia, nowhere has this been more apparent than in the Financial Services Royal Commission and APRA’s CBA Prudential Inquiry Final Report. The developments in the financial sector in 2018 are likely to influence regulation and supervision outside of the financial sector in Australia, including in relation to ABC.
This focus will encourage companies to adopt more sophisticated risk management and compliance practices.
The role of technology in anti-bribery risk management, compliance and enforcement
Technology will play an increased role in ABC risk management, compliance and enforcement in 2019. With greater legal exposure for corporates and higher regulatory expectations regarding corporate capacity to monitor bribery and corruption compliance, the use of software platforms and data feeds to facilitate automated risk assessments, internal monitoring and third-party due diligence is likely to rise. Regulators have indicated their support for these measures and have criticised companies that do not invest in automated solutions to assist with risk management and compliance.
As businesses look to improve their technological capacity, so too are regulators. In the UK, the Rolls Royce investigation conducted by the Serious Fraud Office (SFO) showcased how regulatory agencies have improved their use of technology to investigate corruption. During the investigation, the SFO used artificial intelligence software to review almost 30 million documents at a rate of up to 600,000 per day, with particular benefits for review of documents for legal professional privilege.
This focus on ‘regtech’ looks set to continue: in September 2018, the new director of the SFO, Lisa Osofsky, announced a strategic focus on improving the agency’s technology and intelligence capacity. In August 2018, the Commonwealth earmarked $6 million of funding for ASIC to promote Australia as a leader in regulatory technology solutions. Technology is also a core element of the AFP’s corporate plan for 2018 to 2019.
- Bribery Act 2010 (UK), s7
- Clean Company Act 2014 (Law No. 12,846) (Brazil)
- Prevention of Corruption (Amendment) Act 2018 (India)
- Anti-Corruption Act 2009 (Malaysia), s 17A
- Criminal Justice (Corruption Offences) Act 2018 (Ireland), ss 5-6, s 18.