Bribery and Corruption

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By Ian McKinnon

ian mckinnon

I was recently asked by a Brisbane based business operator with international connections if there was any risk in paying a bribe to a government official based in Papua New Guinea. After conducting research this was my advice.

Bribing or attempting to bribe a foreign public official is a serious crime. Australian companies or individuals who bribe an official in a foreign country can be prosecuted under Australian law and the laws of foreign countries.

In Australia, a person or corporation may be guilty of bribing a foreign public official under the Criminal Code Act 1995 (Cth) if they:

  • provide a benefit, promise to provide a benefit or cause a benefit to be provided, offered or promised to another person; and
  • the benefit is not legitimately due; and
  • the provision of the benefit was carried out with the intention to influence a foreign public official in their official duties in order to obtain or retain business or obtain or retain a business advantage which is not legitimately due.

A person can be prosecuted in Australia where the conduct constituting the offence occurs wholly or partly in Australia. A person can also be prosecuted in Australia for conduct committed wholly outside Australia where, at the time of the alleged offence, the person who is alleged to have committed it 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 business operator may also be liable under anti-corruption laws of third-party countries. For example, the extended jurisdiction of the United States Foreign Corrupt Practices Act of 1977 includes businesses that issue registered securities under US law, and the UK Bribery Act can be applied to any company carrying on a business or part of a business in the UK. This means a company which carries on a business in the UK could be prosecuted under UK law for conduct committed wholly outside the UK.

The other consequences of bribery to organisations include significant reputational damage and incurring substantial legal and professional fees.

The maximum penalty for an individual is 10 years’ imprisonment and/or a fine of 10,000 penalty units, which equates to $1.7 million.

For a company, if the value of benefits obtained through bribery can be ascertained, the penalty is 100,000 penalty units ($17 million) or three times the value of benefits obtained, whichever is greater. If the value of benefits obtained through bribery cannot be ascertained, the penalty is 100,000 penalty units or 10% of the ‘annual turnover’ of the body corporate, whichever is greater.

In addition to the above penalties, bribery by an Australian company or individual of an official in a foreign country may also give rise to liability under the laws of that country. Also under the Proceeds of Crime Act 2002 (Cth), any benefits obtained by foreign bribery can be forfeited to the Australian Government.

Since the business operator has a number of employees in PNG I have suggested he introduce a strict anti-bribery and corruption policy and framework to prevent and detect such activity. Such policy should include the following:

  • a definition of what is considered a bribe
  • an outline of the organisation’s policy on facilitation payments
  • specifications of what must be reported
  • the reporting procedures depending on whom and what the report involves
  • the procedures for allegations made against a client of the organisation, a foreign company, a foreign public official or an employee or agent of the organisation; and
  • general encouragement to employees to make others aware of their anti-bribery obligations under the law and to make clear to clients that the organisation’s staff will not assist, carry out, condone or ignore any act of bribery.

An Important Message

While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents.  Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.

 

 

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