Effective from 8 September 2024, Australian companies operating in or from Australia may face criminal liability if they fail to demonstrate “adequate procedures” to prevent foreign bribery. This legal development follows the enactment of the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024, which introduced a new corporate offense: failing to prevent foreign bribery.
This article provides an overview of the new legislation, the recently published guidance on adequate procedures, and the steps companies should take to ensure compliance.
Overview of the new Legislation
The Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 makes it a criminal offense for a company to fail to prevent an associate, such as an employee, agent, or subsidiary, from engaging in bribery for the company’s benefit.
This offense applies even if the company was unaware of or did not directly authorize the bribery. If found guilty, companies could face significant penalties, including fines of up to AUD 33 million (approximately USD 22 million), three times the value of the benefit obtained from the bribery, or 10% of the company’s annual turnover—whichever is greater.
However, the legislation provides a defense for companies that can prove they have “adequate procedures” in place to prevent foreign bribery. The Australian Attorney-General’s Department recently published its final guidance on adequate procedures, which companies must carefully review and implement to avoid liability.
Six Principles for Adequate Procedures have been put in place.
Adopting a Control Environment: Companies must establish a control environment proportionate to the risk of foreign bribery. This includes implementing effective policies and procedures tailored to the company’s industry, geographic reach, and size. The higher the bribery risk, the more stringent the controls should be.
Top-Level Management Responsibility: Leadership plays a crucial role in preventing bribery. Top-level management must demonstrate a commitment to compliance by providing necessary resources, fostering a culture of integrity, and actively overseeing the company’s anti-bribery efforts.
Risk Assessment: Companies must regularly conduct comprehensive evaluations of their bribery risks, considering factors such as the sectors and countries in which they operate and the nature of their business activities. This risk assessment should be documented and updated as necessary.
Communication and Training: Companies must establish secure, confidential, and accessible reporting mechanisms for suspected instances of bribery. Whistleblower protections should be robust, encouraging employees to report concerns without fear of retaliation.
Reporting Mechanisms and Whistleblower Protections: Companies must establish secure, confidential, and accessible reporting mechanisms for suspected instances of bribery. Whistleblower protections should be robust, encouraging employees to report concerns without fear of retaliation.
Monitoring and Review: Continuous monitoring and regular reviews of the anti-bribery compliance program are vital. The guidance recommends periodic audits, feedback mechanisms, and updates to ensure the program remains relevant and effective in response to changes in the business environment.
Implications for Australian Businesses in Thailand
The new offense of failing to prevent foreign bribery has significant implications for subsidiaries of Australian companies, regardless of their location. Companies must implement robust anti-bribery controls and maintain comprehensive documentation of their compliance efforts. The adequacy of these procedures will be assessed on a case-by-case basis, making it critical for companies to tailor their anti-bribery measures to their specific risk profiles.
Proportionality is key; adequate procedures will vary depending on the company’s industry, size, and geographic exposure. Therefore, Australian businesses based in Thailand should immediately review their existing compliance programs against the six principles outlined in the guidance. If any gaps are identified, necessary changes must be made to align with the new legal requirements.
Conclusion
With the failure to prevent foreign bribery offenses coming into effect on 8 September 2024, companies operating in or from Australia must act swiftly to ensure they have adequate anti-bribery controls in place. By following the principles outlined in the Attorney-General’s guidance, companies can protect themselves from liability and contribute to the global fight against corruption.
Australian companies operating in Thailand or considering conducting business in Thailand can contact www.LawyersForExpatsThailand.com to ensure full compliance with the new regulations are met.
Lawyers for Expats Thailand provide an array of legal services for foreign businesses wishing to operate in Thailand.
To arrange a Free Consultation simply contact Brian Ramsden our General Manager of Foreign affairs info@lawyersforexpatsthailand.com Tel +66956583038
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