21 February 2018 - Post by:Edward Einfeld
The Australian Federal Police (AFP) and the Commonwealth Director of Public Prosecutions (CDPP), the Australian government agencies responsible for investigating and prosecuting foreign bribery, have recently released joint best practice guidelines that indicate how they will approach self-reporting of foreign bribery and related offences by corporations (the Guidelines). The Guidelines seek to provide greater clarity on the AFP and CDPP’s expectations, including when and to which agency a self-report should be made, the conduct of an internal investigation, and any post-report cooperation required of a disclosing company. The Guidelines come at an important time for Australia’s anti-bribery and corruption compliance laws, with the Australian government having recently tabled a series of new laws covering foreign bribery and seeking to introduce a new corporate offense of “failure to prevent bribery of foreign officials” (click here to access our recent client update on the proposed reforms).
In what circumstances do the guidelines apply?
The Guidelines apply where a corporation self-reports a suspected breach of Division 70 of the Criminal Code (Cth), Australia’s legislation prohibiting bribery of foreign public officials, to the AFP. They also apply to other related corporate offences, including money laundering, false document offences and false accounting offences. The Guidelines note that a self-report must be made prior to the AFP commencing its own investigation or receiving a referral from another domestic or international agency.
The Guidelines’ applicability will not be limited to Australian incorporated companies. They are also relevant to multinational companies with operations in Australia.
Under the Guidelines, a self-reporting company is expected to cooperate with the AFP in any investigation that forms the subject of the self-report. The AFP may ask the company to enter into an Investigation Cooperation Agreement to provide a clear framework against which cooperation may be assessed. After a self-report has been made, the AFP expects full access to all relevant documents and witnesses, including reports commissioned by the corporation’s lawyers in relation to the self-reported matter. However, this does not include documents subject to a valid claim of legal professional privilege.
In relation to witnesses, the Guidelines note that while the AFP expects access to individuals relevant to the conduct at issue, this expectation is subject to the corporation’s powers to require cooperation and an individual’s right against self-incrimination.
What are the potential benefits of self-reporting?
The Guidelines identify multiple reasons why a corporation may choose to self-report. The key benefit is the potential to avoid prosecution by making a self-report. The Guidelines note that self-reporting is a relevant public interest factor for the CDPP to take into account when determining whether a corporation should be prosecuted for conduct which it has self-reported. The Guidelines set out a number of considerations when assessing “public interest”, including the quality and timeliness of the self-report and the company’s cooperation with any investigation of the conduct by the AFP and any subsequent prosecution commenced by the CDPP against others in relation to the conduct. In particular, the Guidelines state that:
“prosecuting a corporation that self-reports foreign bribery or related offending may not be in the public interest even if the CDPP is of the view that there are reasonable prospects of obtaining a conviction on the available admissible evidence”.
Another benefit provided under the Guidelines is that a corporation can self-report conduct by its officers and/or employees without admitting criminal responsibility on the part of the corporation. This option potentially encourages a more proactive approach to the discovery of suspicious activities, as it permits a corporation to report its suspicions without accepting that an offence has been committed.
Where a corporation self-reports but a prosecution nonetheless proceeds, the Guidelines also provide a “fast track” mechanism for pleading guilty at an early stage and minimising the potential cost of fines and protracted proceedings.
The Guidelines seek to facilitate and improve cooperation between corporations and the Australian government agencies responsible for investigating and prosecuting foreign bribery. At a minimum, the Guidelines encourage voluntary reporting by increasing awareness about where to go to make a voluntary report and the benefits of self-reporting. Key additional takeaways from the Guidelines for companies grappling with potential misconduct by employees and considering whether to make a voluntary disclosure are as follows:
- Focus on the quality of internal investigations: The Guidelines state that both the AFP and CDPP will assess the quality of any internal investigation conducted by a corporation in response to suspicions of foreign bribery or related misconduct. Further, the quality of any internal investigation and resulting self-report will contribute to the CDPP’s assessment of whether a prosecution of a corporation will be in the “public interest”. In consultation with appropriately experienced external advisers, corporations should consider their processes and procedures around the conduct of internal investigations and whether the investigation record that is created would likely stand up to external scrutiny by a government authority.
- Assess the adequacy of your existing anti-bribery and corruption compliance framework: The Guidelines state that a factor to be taken into account in determining whether prosecution of a self-reporting corporation is in the “public interest” will be whether the corporation has an appropriate governance framework in place to mitigate the risk of bribery and the extent to which there is a culture of compliance at the company. The Guidelines further state that this assessment will be guided by international best practice principles, including any relevant standards and policies issued by the United States Department of Justice and the UK Ministry of Justice. Companies should consider now, in cooperation with external advisers experienced in dealing with U.S. and/or UK authorities and familiar with the compliance program standards published in those jurisdictions, whether they have in place an appropriate, risk-based compliance program designed to prevent and detect potential violations of law.
This blog post was co-authored by Caroline Marshall, a registered foreign lawyer in our Sydney office.