Bribery

By Greg Barns, barrister and member of the Australian Defence Lawyers Alliance.

Bribery is an offence under the Commonwealth Criminal Code Act 1995.

What does the offence consist of?

A person is guilty of bribery if he or she:

• provides a benefit to another person;
• causes a benefit to be provided to another person; or
• offers to provide or promises to provide a benefit to another person

when the benefit is not legitimately due to that person and the person offering the benefit does so with the intention of influencing a foreign public official in order to retain or obtain business or a business advantage.

Mining and exploration

Mining and exploration companies are, like their counterparts in the oil and gas and defence industries, constantly having to deal with all manner of governments across the globe and this means that the risk of being exposed to a bribery charge is higher than it is for most Australians.

Penalty

Under the Act, the offence of bribing a public official can land you in prison for up to 10 years or slug you with a fine of 10,000 penalty units ($2.2 million). The company the person works for could also be fined up to 100,000 penalty units ($22 million) or three times the value of the benefit, or 10 per cent of the company’s turnover in a period of 12 months. The time is measured from 12 months before the offence was committed

The prosecution does not have to prove that any business or business advantage was actually obtained or retained and it is not a defence that the local custom demanded a bribe.

Defences

Possible defences available to an individual or corporation charged with bribery are:

• there as a written law in the country where the bribery allegedly occurred which required or permitted the provision of the benefit;
• the payment made was a “facilitation payment” (more on this below).

What is a “benefit”?

The Code states that a benefit includes any advantage and is not limited to property. There is a similarly sweeping definition of “business advantage” which is defined as “an advantage in the conduct of business”.

There is little doubt that if an Australian company’s joint venture partner receives an advantage through a bribe payment then this will be caught by the definition.

Who is a “foreign public official”?

In addition to public servants and MPs, and local government operatives and judges, a foreign public official can include officials of the UN and other international organisations such as the World Bank. It can also include intra-continental groups or someone who is an authorised intermediary of the official.

What is a “facilitation payment”?

Facilitation payments are the one major exception to the bribery laws in Australia for companies and those working for them in foreign jurisdictions.  A person is not guilty of a bribery offence if the value of the benefit obtained was of a minor nature and the person making the payment was doing so to expedite or secure the performance of a routine government action of a minor nature, and the person making the payment made a record of the conduct as soon as practicable after the payment was made and has kept that record.

A “routine government action” is described as being, for example, processing work permits, giving a licence for someone to work on the country, providing police protection or actions facilitating access to telecommunications, transport or cargo. It does not cover actions taken in awarding or encouraging new business, allowing an existing business to continue or actions taken about the terms of new business.

The facilitation payments defence is a fraught one for companies.  As Ross Buckley and Mark Danielson noted in 2008; “The benefit, under Australian law, is to be of a minor nature. Is that to be assessed relative to the size and wealth of the payer, or the recipient? Part of this confusion may have arisen because section 70 .4 is headed ‘Defence — facilitation payments’ but the language of the section speaks of a ‘benefit’. As the language of the section governs, presumably the focus should be on the value to the recipient of the benefit. However, this doesn’t resolve the issue. Is a payment of $1000 minor because it is made to a senior, wealthy foreign government official, and would it be not minor, and thus a bribe, if made to a junior, underpaid foreign government official?”

Recent publicity in the Fairfax media given to alleged bribery by Australian currency officials and mining giants Rio and BHP Billiton are no doubt ensuring that the Australian Federal Police will give investigations of alleged bribery a much higher priority. The penalties are now severe and mining and exploration companies need to take advice in this area of the law and ensure their systems are robust enough to ensure they are not caught by these laws.

Seeking criminal law advice is an important part of the preventative strategy.

For advice or representation in any legal matter, please contact Armstrong Legal.