Following on from our recent post, we move closer to the Crimes Amendment (Combatting Corporate Crime) Bill 2019 being made into law, with the bill continuing to make its passage through Parliament. For a primer on the changes proposed by the Bill, we encourage you to reread our previous blog post. In today’s post, we will focus on some of the steps that corporations can take as part of good corporate governance to prevent an associate from bribing foreign public officials. These steps are based on the draft guidance document released by the Attorney General (admissions on this document remain open up until 28 February 2020). Pending any significant changes to this document following the admissions period, this document will provide guidance for corporations of all sizes operating across international borders on how they can ensure they are meeting their obligations under the new laws.
What is the Draft Guidance?
The Draft Guidance is a principle-based guide on how entities can reduce the risk of bribery of foreign officials, and provides that companies of all sizes should have procedures in place that are both effective and proportionate in order to prevent bribery occurring within their business. ‘Proportionate’ procedures relate to procedures being developed with a company’s particular circumstances in mind, including the overall risk of foreign-bribery, company size, and the type of business or activities it undertakes. On the other hand, ‘effective’ refers to ensuring that procedures are operationalized effectively. This includes the development of ongoing due diligence procedures, risk assessment, developing a culture of integrity, an attitude of pro-compliance, cautious use of third parties, and a strong anti-bribery compliance function.
What are the fundamental elements?
In addition to outlaying these principles, the Draft Guidance also provides a number of elements that should generally be included in any corporation’s bribery prevention policy.
Australian companies that already have existing anti-bribery policies in place based on international guidelines will find compliance relatively easy, given that these elements are broadly consistent with the UK’s equivalent guidance document, with some additional policies relevant to the Australian context.
These elements are:
- Risk assessment: Corporations should make an initial evaluation of their risk level, and then subsequently conduct periodic re-evaluations, such as when they enter a new market or following turn-over of relevant staff. A corporation with greater risk will need more extensive anti-bribery policies and procedures than those in place for a corporation with lower risk.
- Management dedication: Management personnel should play an active and critical role in the development, implementation, and promotion of a company’s anti-bribery policies.
- Due diligence: Due diligence procedures should be applied by corporations as part of their risk assessment for associates and as a risk mitigation exercise. This should be proportionate to the risks associated with their particular relationship or situation. Depending on the situation and risk level, this may include requesting details on the background, expertise, and experience of relevant individuals, and verifying this information independently and by contacting referees.
- Communication and training: It is important that associates and personnel understand the corporation’s anti-bribery policies and how to apply these policies. For this reason, bribery prevention policies should be communicated and made readily accessible to all associates and staff. Via communication and training, employees and associates should be made aware of the consequences of foreign bribery, how the company expects them to respond to bribe solicitation and how they should report any concerns.
- Confidential reporting and investigation: All corporations, regardless of size, are encouraged to maintain a reporting mechanism that allows internal and external stakeholders to raise concerns about bribery risks, report incidents, and ask for advice. This should be coupled with an effective response system to further consider and investigate any allegations.
- Monitoring and review: Companies should monitor, review and adjust their anti-bribery policies and practices on an ongoing basis, so as to ensure their effectiveness and whether they may need to be adapted to any changes in the business environment.
How should companies prepare?
Relevant companies are encouraged to read over the Draft Guidance document and make any desired submissions prior to 28 February 2020. In the meantime, companies can still consider whether their existing anti-bribery policies and procedures satisfy the document. If they don’t, these policies and procedures should be strengthened in anticipation of the passaged of the 2019 Bill – and regardless, the document outlays what can be viewed as good practice for all Australian companies operating overseas.
Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Peru, Bolivia, Ecuador, Brazil, and Argentina. Over the last 18 years, we have been supporting foreign companies with their growth in Australia and Latin America. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.