The Senate Economics References Committee Foreign bribery March 2018 © Commonwealth of Australia 2018 ISBN 978-1-76010-759-8 This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License. The details of this licence are available on the Creative Commons website: http://creativecommons.org/licenses/by-nc-nd/3.0/au/ Printed by the Senate Printing Unit, Parliament House, Canberra. Senate Economics References Committee Members in the 45th Parliament Senator Chris Ketter (Chair) Queensland, ALP Senator Jane Hume (Deputy Chair) Victoria, LP Senator Cory Bernardi South Australia, IND (to 12 September 2016 and from 5 December 2016 to 15 February 2017) Senator Sam Dastyari (to 5 February 2018) New South Wales, ALP Senator the Hon Kristina Keneally (from 15 February 2018) New South Wales, ALP Senator the Hon Ian Macdonald Queensland, LP (from 12 September 2016 to 5 December 2017and from 15 February 2017 to 22 March 2018) Senator Jenny McAllister New South Wales, ALP Senator Amanda Stoker (from 22 March 2018) Queensland, LP Senator Peter Whish-Wilson (from 14 November 2017) Tasmania, AG Senator Nick Xenophon (to 31 October 2017) South Australia, NXT Members in the 44th Parliament Senator Chris Ketter (Chair from 22 October 2015) Queensland, ALP Senator Sean Edwards (Deputy Chair) South Australia, LP Senator Matthew Canavan (to 23 February 2016) Queensland, NATS Senator the Hon. Kim Carr (until 15 May 2015) Victoria, ALP Senator Sam Dastyari (Chair until 22 October 2015) New South Wales, ALP Senator Jenny McAllister (from 15 May 2015) Victoria, ALP Senator Dean Smith (to 23 February 2016) Western Australia, LP Senator Nick Xenophon South Australia, IND Secretariat Mr Mark Fitt, Secretary Ms Jessica Strout, Principal Research Officer Mr Alan Raine, Principal Research Officer Dr Anne Holmes, Senior Research Officer Mr Harry Hobbs, Senior Research Officer (to 15 January 2016) Ms Georgia Baade, Research Officer (from 1 February 2016 to 29 July 2016) Ms Hannah Dunn, Administrative Officer PO Box 6100 Ph: 02 6277 3540 Parliament House Fax: 02 6277 5719 Canberra ACT 2600 E-mail: [email protected] iii Table of Contents Membership of the Committee ........................................................................ iii Abbreviations and acronyms ............................................................................ ix Foreword .......................................................................................................... xiii Recommendations .......................................................................................... xvii PART I: Overview .............................................................................................. 1 Chapter 1: Introduction ..................................................................................... 5 Conduct of inquiry .................................................................................................. 6 Background ............................................................................................................. 7 Scope and structure of the report ............................................................................ 9 Acknowledgements .............................................................................................. 11 Chapter 2: Australia's anti-foreign bribery framework ............................... 13 International obligations ....................................................................................... 13 Domestic implementation of international obligations ........................................ 15 Assessment of Australia's implementation of international obligations .............. 24 Committee view .................................................................................................... 30 Chapter 3: Investigation and enforcement ..................................................... 31 Government departments and agencies ................................................................ 31 Criticisms of Australia's enforcement of foreign bribery legislation ................... 34 Factors contributing to a lack of enforcement ...................................................... 35 Recent initiatives to improve enforcement ........................................................... 46 Phase 4 OECD Report .......................................................................................... 54 Committee view .................................................................................................... 54 PART II: Strengthening Australia's legal framework against foreign bribery ................................................................................................................ 57 Chapter 4: Reforming the foreign bribery offence ........................................ 61 Including candidates for office in the definition of foreign public official .......... 61 Clarify offence of 'improperly influencing' a foreign public official ................... 63 Extend the offence to cover bribery to obtain a personal advantage ................... 67 v Corporate criminal liability in Australia .............................................................. 68 Other reforms to the foreign bribery offence ....................................................... 84 Introducing a lesser offence of recklessness ........................................................ 87 Chapter 5: Encouraging self-reporting by corporations—A deferred prosecution agreement scheme ........................................................................ 93 What are deferred and non-prosecution agreements? .......................................... 94 Implementing a deferred prosecution agreement scheme in Australia ................ 97 Key features of the DPA scheme proposed in the CCC bill .............................. 101 Committee view .................................................................................................. 110 Chapter 6: Protecting whistleblowers who expose foreign bribery ........... 113 Current whistleblower protections ..................................................................... 113 Whistleblowers need to be better supported ....................................................... 115 Suggestions for reform ....................................................................................... 120 Recent reviews into whistleblowing protections ................................................ 125 Recent legislative developments ........................................................................ 127 Committee view .................................................................................................. 130 PART III: Building a culture of integrity and compliance ......................... 133 Chapter 7: The facilitation payment defence ............................................... 137 Current position in Australia .............................................................................. 137 International move towards abolishing the facilitation payment defence .......... 139 Facilitation payment defence in Australia .......................................................... 143 Stakeholder opinion ............................................................................................ 147 Arguments in favour of abolishing the facilitation payment defence ................ 154 Committee view .................................................................................................. 161 Chapter 8: Other reform options .................................................................. 163 Expansion of the register of beneficial ownership ............................................. 163 Committee view .................................................................................................. 168 Integrity in public procurement .......................................................................... 169 Committee view .................................................................................................. 174 Building a culture of compliance ....................................................................... 175 Committee view .................................................................................................. 181 vi Appendix 1: Examples of foreign bribery involving Australian entities ... 183 Coalition Senators Additional Comments .................................................... 203 General comments .............................................................................................. 203 Chapter 3—Investigation and enforcement ........................................................ 203 Chapter 4—Reforming the foreign bribery offence ........................................... 204 Chapter 5—Encouraging self-reporting by corporations—A deferred prosecution agreement scheme ........................................................................... 204 Chapter 6—Protecting whistleblowers who expose foreign bribery ................. 204 Chapter 7—The facilitation payment defence .................................................... 205 Chapter 8—Other reform options ....................................................................... 205 Appendix 2: Submissions and additional documents .................................. 207 Submissions ........................................................................................................ 207 Tabled Documents .............................................................................................