Commonwealth of Australia Explanatory Memoranda Commonwealth of Australia Explanatory Memoranda[Index] [Search] [Download] [Bill] [Help]
2016-2017
THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA
SENATE
CRIMES LEGISLATION AMENDMENT (COMBATTING CORPORATE CRIME)
BILL 2017
EXPLANATORY MEMORANDUM
(Circulated by authority of the
Minister for Justice, the Hon Michael Keenan MP)
CRIMES LEGISLATION AMENDMENT (COMBATTING CORPORATE CRIME)
BILL 2017
GENERAL OUTLINE
1. This Bill amends the Criminal Code (which is a schedule to the Criminal Code Act
1995), Director of Public Prosecutions Act 1983, Administrative Decisions (Judicial
Review) Act 1977, Crimes Act 1914, Income Tax Assessment Act 1997 and A New Tax
System (Goods and Services Tax) Act 1999.
2. The Bill contains measures to address challenges associating with detecting and
addressing serious corporate crime. The opaque and sophisticated nature of serious corporate
crime can make it difficult to identify and relatively easy to conceal. Investigations into
corporate misconduct can be hampered by the need to process large amounts of complex
data and conduct lengthy negotiations over claims of legal professional privilege. Evidence
may be held overseas and therefore require investigators to engage with mutual assistance
processes. Court proceedings can be long and expensive, particularly against well-resourced
corporate defendants.
3. The Bill contains two schedules.
4. Schedule 1 amends the Criminal Code, which is a schedule to the Criminal Code
Act 1995, by amending Division 70 (bribery of foreign public officials).
5. Schedule 1 of the Bill:
Amends the offence of bribery of a foreign public official (section 70.2 of the
Criminal Code) with the aim of removing undue impediments to successful
investigation and prosecution of foreign bribery offending. In general terms, this is
achieved by broadening the offence, removing unnecessarily restrictive requirements
and clarifying some requirements. The main changes to the existing offence are:
o the definition of foreign public official is extended to include a candidate for
office
o the requirement that the foreign official must be influenced in the exercise of
the official's duties is removed
o the requirement that a benefit and business advantage must be 'not
legitimately due' is removed and replaced with the concept of 'improperly
influencing' a foreign public official. Instructive factors for determining this
concept are provided, and
o the offence to cover bribery to obtain a personal (i.e. non-business) advantage
is extended.
Introduces a new offence of failure of a body corporate to prevent foreign bribery by
an associate. The body corporate would be liable where the associate committed the
bribery for the profit or gain of the body corporate. The offence would not apply if
the body corporate had in place adequate procedures designed to prevent the
commission of the foreign bribery offence by its associates.
2
Makes consequential amendments to the Income Tax Assessment Act 1997 to ensure
the continuation of the existing policy of prohibiting a person from claiming a
deduction for a loss or outgoing the person incurs that is a bribe to a foreign public
official.
6. Bribery of foreign public officials by individuals and bodies corporate is a serious
problem across the globe. It harms those who play by the rules, siphons money away from
communities, and undermines the rule of law. Bribery by Australians and Australian
businesses can damage our international standing and shrink the global market for our
exports.
7. Australia has been a committed party to the OECD Convention on Combating Bribery
of Foreign Public Officials in International Business Transactions (the Anti-Bribery
Convention) since 1999. The Anti-Bribery Convention obliges States parties to criminalise
the bribery of foreign public officials and implements a range of related measures to make
this criminalisation effective. Australia has given effect to these obligations through the
foreign bribery offence in section 70.2 of the Criminal Code, which carries significant
penalties for individuals and companies.
8. The Government has been exploring possible amendments to this offence to improve
its effectiveness in addressing foreign bribery, and to remove undue impediments to a
successful prosecution. The offence in its current form poses challenges for typical cases of
foreign bribery, which may involve the use of third party agents or intermediaries, instances
of wilful blindness by senior management to activities occurring within their companies and
a lack of readily available written evidence.
9. Schedule 2 of the Bill implements a Commonwealth Deferred Prosecution Agreement
(DPA) scheme.
10. Under the DPA scheme, the Commonwealth Director of Public Prosecutions (CDPP)
can invite a person (other than an individual) that has engaged in serious corporate crime to
negotiate an agreement to comply with a range of specified conditions. If a person fulfils its
obligations under the agreement (the DPA), it will not subsequently be prosecuted in relation
to the offences specified in the DPA. A breach of the terms of a DPA may result in the
CDPP commencing prosecution or renegotiating the terms of the DPA with the person.
DPAs are only available with respect to a specific set of serious corporate criminal offences.
11. The DPA scheme is designed to address some of the challenges in detecting and
addressing serious corporate crime by encouraging corporations to self-report misconduct by
offering greater certainty of outcome when compared to litigation, and an opportunity to
avoid some of the reputational and financial costs associated with lengthy criminal
investigations and trial processes. For this reason, DPAs are not available to natural persons,
and the scheme is designed to apply to corporations.
12. The scheme also aims to enhance the accountability of Australian business for serious
corporate crime and support improved corporate culture. For this reason, terms included in a
DPA will require a party to a DPA to admit to agreed facts detailing their misconduct, pay a
financial penalty to the Commonwealth and disgorge profits and other benefits obtained
through the conduct. It is also likely that a DPA will typically require a corporation to
implement or improve a compliance program or policies, and cooperate in any investigation
3
relating to the matters specified in the DPA (including any investigation against individual
company officers).
13. The Bill contains a number of safeguards to ensure that the DPA scheme does not
represent a 'free pass' to corporations who have engaged in serious corporate crime. For
example, a DPA will not enter into force until it has been independently assessed by an
'approving officer' who is an appointed former judicial officer. This will provide an extra
layer of certainty that the terms of the DPA are in the interests of justice and are fair,
reasonable and proportionate. The Bill also requires that the Director of the CDPP must be
satisfied that entering into a DPA is in the public interest before submitting a DPA to an
approving officer for consideration. The Bill further protects against exploitation of the DPA
process by allowing for the prosecution of a party who materially contravenes a DPA, or
who provided inaccurate, misleading or incomplete information to a Commonwealth entity
in connection with a DPA or a DPA negotiation.
FINANCIAL IMPACT
14. The Bill is unlikely to have a significant impact on consolidated revenue.
15. Schedule 1 is designed to remove impediments to successfully prosecuting foreign
bribery. This may result in an increased recovery of penalties for the foreign bribery offence.
16. Under the DPA scheme in schedule 2, parties to a DPA will typically be required to
pay a financial penalty to the Commonwealth under the terms of that DPA. This may lead to
the recovery of penalties in cases that might not have otherwise proceeded to prosecution.
Where appropriate, a party to a DPA may also be required to compensate Commonwealth
agencies for any costs associated with the negotiation and administration of a DPA.
Otherwise, costs incurred by Commonwealth agencies as a result of the DPA process will be
absorbed by these agencies.
4
ACRONYMS
ADJR Act Administrative Decisions (Judicial Review) Act 1977
AFP Australian Federal Police
ARC Administrative Review Council
CDPP Commonwealth Director of Public Prosecutions
Corporations Act Corporations Act 2001 (Cth)
Crimes Act Crimes Act 1914
DPA Deferred prosecution agreement
DPP Act Director of Public Prosecutions Act 1983
ICCPR International Covenant on Civil and Political Rights [1976] ATS 5
ITAA Income Tax Assessment Act 1997
Judiciary Act Judiciary Act 1903
5
STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017
17. This Bill is compatible with the human rights and freedoms recognised or declared in
the international instruments listed in section 3 of the Human Rights (Parliamentary
Scrutiny) Act 2011. To the extent that the measures in the Bill may limit those rights and
freedoms, such limitations are reasonable, necessary and proportionate in achieving the
intended outcomes of the Bill.
Overview of the Bill
18. The Bill amends a number of Acts, including the Criminal Code Act 1995, Director of
Public Prosecutions Act 1983, Administrative Decisions (Judicial Review) Act 1977, Crimes
Act 1914, Income Tax Assessment Act 1997 and A New Tax System (Goods and Services
Tax) Act 1999.
19. The Bill contains measures to deliver a more effective response to serious corporate
crime. The Bill amends the offence of bribing a foreign public official (foreign bribery
offence) in Division 70 of the Criminal Code. It repeals the existing offence in Division 70
and substitutes a new offence to remove undue impediments to successful investigation and
prosecution of foreign bribery offending by broadening the offence, removing restrictive
requirements and clarifying some requirements. It also introduces a new offence of failure of
a body corporate to prevent foreign bribery by an associate.
20. The Bill also implements a Commonwealth DPA scheme. Under the DPA scheme, the
CDPP can invite a person (other than an individual) that has engaged in serious corporate
crime to negotiate an agreement to comply with a range of specified conditions. If a person
fulfils its obligations under the agreement (the DPA), it will not subsequently be prosecuted
in relation to the offences specified in the DPA. A breach of the terms of a DPA may result
in the CDPP commencing prosecution or renegotiating the terms of the DPA with the
person.
21. Further details regarding the measures in the Bill and their human rights implications
are set out below.
Human rights implications
22. The human rights that are engaged by the Bill are set out in Articles 9, 14 and 17 of
the ICCPR.
Article 9 - freedom from arbitrary detention
23. The Bill engages the right to freedom from arbitrary detention under Article 9(1) of
the ICCPR by creating an offence for which a court may lawfully prescribe a period of
imprisonment for a person found guilty of the offence. The offence for which imprisonment
would be a penalty is bribery of a foreign public official in new section 70.2 of the Criminal
Code. The maximum penalty is 10 years of imprisonment.
6
24. The penalty is reasonable to achieve the legitimate objective of ensuring that the
courts are able to impose a sentence for the offence of foreign bribery that reflects the
seriousness of the offending. The penalty would only be applied by a court if a person is
convicted of an offence as a result of a fair trial in accordance with the procedures as
established by law. Maximum penalties are set to adequately deter and punish a worst case
offence, including repeat offences, while supporting judicial discretion and independence.
The penalty will only be applied by a court if the prosecution has proved the elements of the
offence beyond reasonable doubt. Further, the penalty will apply only to offences committed
at or after the commencement of the new offence.
Article 14(1) - right to a fair and public hearing
25. Article 14(1) of the ICCPR provides that 'in the determination of any criminal charge
against him, or of his rights and obligations in a suit at law, everyone shall be entitled to a
fair and public hearing by a competent, independent and impartial tribunal established by
law'.
26. The DPA scheme does not compromise the right to a fair and public hearing. Where a
person (other than an individual, who cannot seek a DPA) engages with the DPA scheme,
they will do so on an entirely opt-in basis. A person may elect not to utilise the DPA scheme,
in which case the CDPP may exercise its discretion to prosecute the person as per standard
procedures.
27. If a DPA is materially contravened, the CDPP may institute proceedings in relation to
the matters contained in the DPA. The Bill does not seek to limit a corporation's access to a
fair or public hearing in this context.
Article 14(2) - right to be presumed innocent
28. Article 14(2) of the ICCPR provides that 'everyone charged with a criminal offence
shall have the right to be presumed innocent until proved guilty according to law'. It imposes
on the prosecution the burden of proving a criminal charge and guarantees that no guilt can
be presumed until the charge has been proved beyond reasonable doubt. Offences that
contain 'reverse burden' provisions may amount to a limitation on the presumption of
innocence. This includes where an 'evidential' or 'legal burden' defence is created by
expressing a matter to be a defence or an exception to the offence. This is because a
defendant's failure to establish an absence of fault (for example, through a mistake of fact
defence) or to discharge a burden of proof may permit their conviction where the elements of
the offences are proved beyond reasonable doubt.
29. Item 7 of schedule 1 of the Bill extends the existing defence of lawful conduct, which
applies to the foreign bribery offence in section 70.2 of the Criminal Code, to situations
where the conduct relates to bribing an individual standing or nominated as a candidate to be
a foreign public official. For example, the defence would be available to a person who
provides a benefit to a candidate for a political office or a public service position under a law
of a foreign country, if the written law in force in the foreign country permits the provision
of the benefit. Item 7 would provide that the defendant bears the evidential burden of
establishing the defence of lawful conduct.
30. Item 8 of schedule 1 of the Bill establishes a new offence of failure by a body
corporate to prevent bribery of a foreign public official by an associate. It would also provide
7
that the new offence will not apply if the body corporate had in place adequate procedures
designed to prevent an associate from committing foreign bribery. The defendant would bear
a legal burden in relation to this matter. The justification for imposing this legal burden on
the body corporate is that it would create a strong positive incentive to encourage
corporations to adopt measures to prevent foreign bribery. The Bill would require the
Minister to publish guidance on the steps that body corporates can take to prevent an
associate from bribing foreign public officials. This offence applies only to bodies corporate
and not to individuals.
31. The DPA scheme in schedule 2 does not reverse the presumption of innocence.
Entering in a DPA would not require an admission of guilt. The CDPP will be required to
prove its case beyond reasonable doubt in any criminal proceedings instituted in relation to
the matters contained in the DPA.
32. Under the DPA scheme, a party to a DPA would be required to agree to a statement of
facts outlining the scope of the party's likely offending. If the party subsequently materially
contravenes the DPA, this statement of facts will be taken to be agreed facts for the purposes
of section 191 of the Evidence Act 1995 in any criminal proceeding that is subsequently
instituted by the CDPP in relation to the matters in the DPA or any proceeding under the
Proceeds of Crime Act 2002.
33. To the extent that the agreed statement of facts might constitute a limitation on the
right to be presumed innocent, this limitation is fair, reasonable and proportionate. A
person's engagement with the DPA scheme, and subsequent agreement to a statement of
facts, would occur on an entirely voluntary basis. Furthermore, the agreed statement of facts
is pivotal to the integrity of the DPA scheme. It will encourage the person to negotiate a
DPA in good faith (rather than exploiting the scheme to avoid prosecution) by helping to
establish a likelihood of a successful prosecution if the person materially contravenes the
DPA.
34. These measures of the Bill are compatible with human rights. To the extent that the
measures may limit Article 14 of the ICCPR, those limitations are reasonable, necessary and
proportionate in light of the objective of strengthening agencies' ability to respond to serious
corporate crime.
Article 17 - right to privacy
35. Article 17 of the ICCPR provides that no-one shall be subjected to arbitrary or
unlawful interference with his privacy, family, home or correspondence. In order for an
interference with the right to privacy to be permissible, the interference must be authorised
by law, be for a reason consistent with the ICCPR and be reasonable in the particular
circumstances.
36. Schedule 2 of the Bill engages with Article 17 of the ICCPR by allowing for the
disclosure of information (including personal information) that is obtained by a
Commonwealth entity, or an official of a Commonwealth entity, as a direct result of the
negotiating, entering into, or administering of a DPA.
37. It is likely that most of the information to which the Bill relates will include details of
corporate criminal behaviour rather than personal information. To this end, the Bill outlines
8
the specific circumstances within which information obtained as a result of a DPA process
can be shared, being:
with a Commonwealth entity for the purposes of assisting the entity to exercise its
powers, or perform its functions or duties
with a Commonwealth entity or an authority of a State or Territory or a foreign
country for law enforcement purposes, or for the protection of public health, or the
life or safety of an individual or group of individuals, and
with a court or tribunal, authority or person that has the power to require the
answering of questions or the production of documents for the purposes of
proceedings before, or in accordance, with an order of, the court, tribunal, authority or
person.
38. By allowing information obtained as a result of the negotiating, entering into, or
administering of a DPA to be disclosed in the ways specified, the Bill promotes the efficient
enforcement of laws, administration of justice, and business of government. As such, to the
extent that the Bill limits the right to privacy, it is consistent with the ICCPR, is reasonable
in the circumstances, and is proportionate to a legitimate end.
Conclusion
39. The Bill is compatible with human rights. To the extent that it may limit those rights,
the limitations are reasonable, necessary and proportionate in light of the objective of
strengthening agencies' ability to respond to serious corporate crime.
9
NOTES ON CLAUSES
Preliminary
Clause 1 - Short title
40. Clause 1 provides for the short title of the Act to be the Crimes Legislation
Amendment (Combatting Corporate Crime) Act 2017.
Clause 2 - Commencement
41. Clause 2 provides for the commencement of each provision in the Bill, as set out in
the table at Clause 2(1).
42. Clause 2(2) specifies that information in column 3 of the table at Clause 2(1) is not a
part of the Act, and information may be inserted in this column, or information in it may be
edited, in any published version of this Act.
Clause 3 - Schedules
43. Clause 3 provides that legislation that is specified in a Schedule to this Act is
amended or repealed as set out in the applicable items in the Schedule concerned, and any
other item in a Schedule to this Act has effect according to its terms.
10
Schedule 1 - Foreign bribery
Part 1 - Main amendments
Criminal Code Act 1995
Item 1 - Before section 70.1 of the Criminal Code
45. Item 1 inserts a new heading for Subdivision A -- Definitions. This reflects the
restructuring of Division 70.2 to include subdivisions.
Item 2 -- Section 70.1 of the Criminal Code
46. Item 2 amends section 70.1 to include new definitions for relevant terms in the
Division. The new definitions provide that: 'advantage' means an advantage of any kind and
is not limited to property; 'annual turnover' has the meaning given by new section 70.5C;
and a person is an 'associate' of another person if the first-mentioned person is an officer,
employee, agent, contractor or subsidiary of the other person, is controlled by the other
person or performs services for or on behalf of another person.
47. These are definitions of key terms included in the new offences of bribing a foreign
public official (new section 70.2) or failing to prevent bribery of a foreign public official
(new section 70.5A).
48. The definition of associate is intended to provide clarity by reference to the
associate's role or position relative to the body corporate, i.e. an officer, employee, agent,
contractor, subsidiary or controlled entity of the person would be an associate. Subsidiary is
defined within the meaning of Division 6 of the Corporations Act 2001 (Cth), which
provides that a body corporate is a subsidiary of another body corporate if, and only if:
the other body controls the composition of the first body's board (section 47 of the
Corporations Act provides that, without limiting the circumstances, this control exists
when the body corporate can appoint or remove all, or the majority, of the directors of
the first-mentioned body, or
the other body is in a position to cast, or control the casting of, more than one half of
the maximum number of votes that might be cast at a general meeting of the first
body, or
the other body holds more than one-half of the issued share capital of the first body
(excluding any part of that issued share capital that carries no right to participate
beyond a specified amount in a distribution of either profits or capital), or
the first body is a subsidiary of a subsidiary of the other body.
49. A subsidiary within the meaning of the Corporations Act includes a body corporate
that: (a) is incorporated outside of Australia; and (b) otherwise meets the definition of
subsidiary in section 46 of that Act.
50. Control of a body corporate is also defined within the meaning of Division 6 of the
Corporations Act. Section 50AA of the Corporations Act provides that an entity controls a
second entity if the first entity has the capacity to determine the outcome of decisions about
the second entity's financial and operating policies.
11
51. The definition of associate is also intended to have broad application to a person who
provides services for or on behalf of another person. Such a person would not necessarily
need to be an officer, employee, agent, contractor, subsidiary or controlled entity.
Item 3 -- Section 70.1 of the Criminal Code (definitions of benefit and business
advantage)
52. Item 3 repeals the existing definitions of 'benefit' and 'business advantage' in
section 70.1.
53. The existing definition of 'benefit' in section 70.1 is repealed as this definition is
already provided in the Dictionary at the end of the Criminal Code.
54. The term 'business advantage' is removed from Division 70 entirely as this concept
would not be used in the new offence of bribing a foreign public official should section 70.2
be repealed under Item 6 of this Schedule. As explained under Item 6 below, the new offence
of bribing a foreign public official (new section 70.2) covers bribery to obtain or retain
business or an advantage. Advantage is defined in section 70.1 as an advantage of any kind
and is not limited to property.
Item 4-- Section 70.1 of the Criminal Code (at the end of the definition of foreign public
official)
55. Item 4 amends the definition of 'foreign public official' in section 70.1 to include a
person standing, or nominated, (whether formally or informally) as a candidate to be a
foreign public official covered by any of paragraphs (a) to (k) of the existing definition.
56. This amendment ensures that the foreign bribery offences extend to bribes made to
candidates for public office. Law enforcement experience indicates that individuals or
companies may seek to bribe candidates for public office, with the intent of obtaining an
advantage once the candidate takes office. It is appropriate to criminalise this conduct given
that it equally undermines good governance and free and fair markets.
Item 5 -- After section 70.1 of the Criminal Code
57. Item 5 inserts new Subdivision B -- Bribery of foreign public officials. This reflects
the restructuring of Division 70.2 to include subdivisions.
Item 6 -- Section 70.2 of the Criminal Code
Overview
58. Item 6 repeals the existing foreign bribery offence in section 70.2 and replaces it with
a new offence of bribing a foreign public official. The reason for replacing the existing
offence is to address challenges authorities currently face in investigating and prosecuting
the offence, as articulated in the Government's public consultation paper 'Proposed
amendments to the foreign bribery offence in the Criminal Code Act 1995', released in
April 2017.
59. Challenges relating to the existing foreign bribery offence include difficulty proving
the intention elements and the need to show that both the bribe and the business advantage
sought were not legitimately due. In some cases, the threshold of not legitimately due
12
presents challenges, for example bribe payments can be concealed as agent fees, making it
difficult to show, beyond a reasonable doubt, that the payments were not legitimately due.
Proving the existing offence requires reliance on international legal assistance processes, for
example to prove that a benefit or advantage was not legitimately due or that a foreign
official was working within their official duties, which may take time or be unsuccessful.
60. In summary, Item 6 changes the existing foreign bribery offence in section 70.2 in the
following ways:
removes the requirement that the foreign official must be influenced in the exercise of
the official's duties
removes the requirement that a benefit and business advantage must be 'not
legitimately due' and replace it with the concept of 'improperly influencing' a foreign
public official, and
extends the offence to cover bribery to obtain a personal (i.e. non-business)
advantage.
New section 70.2 - Bribing a foreign public official
61. The foreign bribery offence in new section 70.2 provides that a person commits an
offence if the person:
provides, offers, or promises a benefit to another person, or causes the benefit to be
provided, offered or promised to another person (new paragraph 70.2(1)(a)), and
does so with the intention of improperly influencing a foreign public official in order
to obtain or retain business or an advantage (new paragraph 70.2(1)(b)).
62. Providing, offering, or promising a benefit to another person or causing the benefit to
be provided, offered or promised to another person under new paragraphs 70.2(1)(a) is
conduct that carries the fault element of intention. Intention applies to this fault element
pursuant to subsection 5.6(1) of the Criminal Code. Intention means that the person must
mean to engage in that conduct (as per subsection 5.2(1) of the Criminal Code).
63. The circumstance in new paragraph 70.2(1)(b) is that a foreign public official has
been, or will be, improperly influenced. A person will have intention with respect to the
circumstance in new paragraph 70.2(1)(b) if they believe that a foreign public official has
been, or will be, improperly influenced (as per subsection 5.2(2) of the Criminal Code).
64. The existing foreign bribery offence applies only to bribery of foreign public officials
to obtain or retain business or business advantages. The new offence is not limited in this
way, instead it applies where the bribe was to obtain or retain an advantage of any kind, not
limited to property. The intention is to extend the offence to cover bribery to obtain a
personal advantage.
65. Law enforcement experience has shown in some cases, foreign bribery can occur
where the advantage sought is personal. These could include instances where a foreign
official is improperly influenced in the bestowal of personal titles or honours or in relation to
the processing of visa or immigration requests.
66. Paragraphs 70.2(2)(a) and (c) provide that a person does not need to intend to
improperly influence a particular foreign public official, or actually obtain or retain business
13
or an advantage. These paragraphs are consistent with existing subsection 70.2(1A). New
paragraph 70.2(2)(b) further provides that a person does not need to intend to obtain or retain
a particular business or a particular advantage. This means the prosecution would not need to
prove the particular business or advantage that is related to the bribery.
67. Subsections 70.2(3) and (4) provide the maximum penalties applicable for the new
offence for individuals (subsection 70.2(3)) and bodies corporate (subsection 70.2(4)). These
penalties are the same as that for the existing foreign bribery offence under existing
subsections 70.2(4) and (5).
68. New paragraph 70.2(4)(c), regarding the relevant period for assessing a body
corporate's annual turnover for the purpose of determining the maximum fine, replicates
existing paragraph 70.2(5)(c), except for one clarification. The existing paragraph provides
that the relevant period is 12 months ending at the end of the month in which the body
corporate committed the offence. The new paragraph clarifies that the period could also end
at the end of the month in which the body corporate began committing the offence, which
would apply where the offence was committed over a period greater than a month. This is
consistent with similar provisions in the Corporations Act and provides greater clarity
around the calculation of this amount.
New section 70.2A - Improper influence
69. The new offence of foreign bribery is based on the concept of improper influence of a
foreign public official. This term would better characterise the conduct of foreign bribery
than the current term 'not legitimately due'.
70. New section 70.2A provides detail on the new concept of improper influence.
Subsection 70.2A(1) provides that, in a prosecution for the foreign bribery offence, the
determination of whether influence is improper is a matter for the trier of fact.
71. Subsection 70.2A(2) provides factors to be disregarded in determining whether
influence is improper for the purposes of paragraph 70.2(1)(b). These factors are modelled
on existing subsections 70.2(2) and (3) and include:
the fact that the benefit, or the offer or promise to provide the benefit, may be, or be
perceived to be, customary, necessary or required in the situation
any official tolerance of the benefit, and
if particular business or a particular advantage is relevant to proving the matters
referred to in paragraph 70.2(1)(b):
o the fact that the value of the business or advantage is insignificant
o any official tolerance of the advantage
o the fact that the advantage may be customary, or perceived to be customary, in
the situation.
72. Subsection 70.2A(3) provides factors which may be considered in determining
whether influence is improper. These factors include:
the recipient or intended recipient of the benefit
the nature of the benefit
14
how the benefit was provided
whether the value of the benefit is disproportionate to the value of consideration or
purported consideration (if any) for the benefit
whether the benefit, or the offer or promise to provide the benefit, was provided in the
absence of any legal obligation to do so
whether the benefit was provided, or the offer or promise to provide the benefit was
made, dishonestly
whether, and to what extent, the benefit, offer or promise is recorded or documented
if the provision of the benefit, or the offer or promise to provide the benefit, is
recorded or documented:
o the accuracy of the record or documentation, and
o whether the record or documentation is consistent with the ordinary practices
of the person who made the record or documentation
whether there is evidence that due diligence was exercised in relation to the benefit, or
the offer or promise to provide the benefit
whether any of the following conduct is contrary to a written law in the place where it
occurs:
o the provision of the benefit, or the offer or promise to provide the benefit
o the acceptance of the benefit, or
o any conduct directly connected with the provision, offer or promise to provide,
or acceptance of the benefit, and
in relation to business or a particular advantage:
o whether the business or advantage was awarded on a competitive or non-
commercial basis
o whether there is any demonstrable conflict of interest in the provision of the
business or advantage.
73. Subsection 70.2A(4) provides that the factors listed above do not limit the matters that
can be considered in determining whether influence is improper.
74. The factors are intended to reflect, in a non-exhaustive manner, the conduct of bribery
of a foreign public official. For example, the test of whether the value of the benefit is
disproportionate to the value of consideration or purported consideration (if any) for the
benefit (paragraph 70.2A(3)(d)) could be applied where a bribe is paid through an agent
supported by an agency agreement. Under this example, in assessing improper influence, the
trier of fact could compare the value of the agent's services with the amount paid for those
purported services. Under this paragraph, the trier of fact could consider any disproportion,
but it is intended that a lack of disproportion itself would not be determinative of whether the
influence was improper.
75. As another example, if a benefit provided or offered to a foreign public official may
be of low or insignificant value in Australian dollar terms and of higher value in the location
of the official, the trier of fact could consider the value to the official in determining whether
15
influence is improper. In this scenario, among other things, the trier of fact may have regard
to the nature of the benefit (paragraph 70.2A(3)(b)) and whether the value of the benefit is
disproportionate to the value of any consideration provided or purported to have been
provided for the benefit (paragraph 70.2A(3)(d)).
76. There are two factors connected to the legality of the conduct: paragraph 70.2A(3)(e)
concerns the absence of any legal obligation to provide a benefit, and paragraph 70.2A(3)(j)
concerns conduct contrary to a written law in the place where it occurs. It is intended that the
existence of either of these particular factors in a matter would likely carry significant weight
in determining that influence is improper, depending on the broader circumstances.
77. The factor in paragraph 70.2A(3)(f) is whether the benefit was provided, or the offer
or promise to provide the benefit was made, dishonestly. It is intended that dishonesty would
have the same meaning as in other parts of the Criminal Code, meaning dishonest according
to the standards of ordinary people and known by the defendant to be dishonest according to
the standards of ordinary people. It is intended that ordinary people in this context would be
ordinary people residing in Australia.
78. The factors in paragraphs 70.2A(3)(g) and (h) refer to matters that are recorded or
documented. It is intended that recorded would cover something that is set down in writing
or other form (whether or not in electronic form) and documented would refer to there being
documentation to support something.
Item 7 - After subsection 70.3(2) of the Criminal Code
79. Item 7 inserts new subsection 70.3(2A). This extends the existing defence of lawful
conduct, which applies to the foreign bribery offence in section 70.2, to situations where the
conduct relates to an individual standing or nominated as a candidate to be a foreign public
official.
80. Existing section 70.3 sets out the terms of the defence of conduct lawful in the foreign
public official's country. The table in existing subsection 70.3(1) prescribes the source of the
applicable law that will apply to the different classes of foreign public officials. The different
classes are contained in the definition of 'foreign public official' in existing subsection 70.1,
to which Item 4 above adds a person standing, or nominated, (whether formally or
informally) as a candidate to be a foreign public official in a position covered by any of the
existing paragraphs under the definition.
81. New subsection 70.3(2A) provides, by reference to the conditions in the table in
existing subsection 70.3(1), a defence where the conduct occurred in relation to a candidate
for the position of foreign public official and a written law in force in the relevant place
permits the provision of the benefit to the relevant foreign public official. For example, the
defence would be available to a person who provides a benefit to a candidate for a political
office or a public service position under a law of a foreign country, if the written law in force
in the foreign country permits the provision of the benefit.
82. Item 7 provides that the defendant bears the burden of adducing or pointing to
evidence that suggests a reasonable possibility that the matters comprising the defence exist
(section 13.3 of the Criminal Code). If the defendant discharges an evidential burden, the
prosecution must disprove those matters beyond reasonable doubt (section 13.1 of the
Criminal Code).
16
Item 8 -- After section 70.5 of the Criminal Code
83. Item 8 inserts new Subdivision C -- Failure to prevent bribery of foreign public
officials.
New section 70.5A - Failing to prevent bribery of a foreign public official
84. New section 70.5A of this Subdivision inserts a new offence of failing to prevent
bribery of a foreign public official that can only be committed by a body corporate.
85. Subsection 70.5A(1) provides that a person will commit an offence if:
the person is a body corporate that is a constitutional corporation, incorporated in a
Territory or taken to be registered in a Territory under the Corporations Act, and
an associate of the body corporate:
o commits the offence of foreign bribery against section 70.2, or
o engages in conduct outside Australia that, if engaged in in Australia, would
constitute an offence against section 70.2 (the notional offence), and
the associate does so for the profit or gain of the body corporate.
86. An associate is defined in amendments to section 70.1 described above under Item 2.
A person is an 'associate' of another person if the first-mentioned person is an officer,
employee, agent, contractor or subsidiary of the other person, is controlled by the other
person, or otherwise performs services for or on behalf of another person.
87. Paragraph 70.5A(1)(b)(ii), covers the situation where an associate engages in conduct
outside Australia that, if engaged in in Australia, would constitute an offence against
section 70.2. It is intended that this paragraph would cover situations where a subsidiary of a
body corporate engages in conduct abroad that would constitute the foreign bribery offence.
88. Conduct that is done for the "profit or gain" of the body corporate
(paragraph 70.5A(1)(c)) is not defined in the legislation and would be interpreted by
reference to the ordinary meaning of the words. It is intended these are broad concepts, in
particular gain could include any sort of benefit or advantage to the body corporate. For
example, it is intended to cover the situation where a company benefits merely because it is
the beneficial owner of a subsidiary company that commits the foreign bribery offence.
89. Subsection 70.5A(2) provides that absolute liability applies to certain elements of the
new offence in subsection 70.5A(1), namely, to paragraphs (a) and (c), and the
circumstances contained in subparagraphs (b)(i) and (ii). The fault elements of the
underlying conduct by the associate described in those subparagraphs would still need to be
established by the prosecution.
90. The Guide to Framing Commonwealth Offences, Infringement Notices and
Enforcement Powers provides that the application of absolute liability should only be used in
limited circumstances, and where there is adequate justification for doing so. The Guide
provides that applying absolute liability to particular physical elements of an offence may be
justified where requiring proof of fault of the particular element to which strict or absolute
liability applies would undermine deterrence, and there are legitimate grounds for penalising
persons lacking 'fault' in respect of that element. It may also be justified where the particular
17
element of the offence is a jurisdictional element rather than one going to the essence of the
offence.
91. In this case, applying absolute liability to the above elements of the new offence is
necessary to ensure the effectiveness of the new offence and the enforcement regime. This
would ensure that the offence operates as intended, where the only way to avoid liability for
the body corporate to avoid liability is by having adequate procedures in place, as explained
further below. This is necessary to overcome challenges in establishing liability of corporate
entities for foreign bribery, and to ensure that companies are not able to avoid possible
liability through wilful blindness. The application of absolute liability to
paragraph 70.5A(1)(a) is necessary as this aspect of the offence is a jurisdictional element. It
is not appropriate to permit the defence of mistake of fact to the offence elements in
paragraph 70.5A(1)(b). It is sufficient that the fault elements of the underlying conduct by
the associate described in those subparagraphs would still need to be established by the
prosecution.
92. Subsection 70.5A(3) clarifies that the body corporate may be convicted of an offence
against this section even if the associate has not been convicted of an offence against
section 70.2. The prosecution would need to show that the associate committed a foreign
bribery offence against section 70.2 or engaged in the conduct described in new
subparagraph 70.5A(1)(b)(ii), but would not need to show that the associate has been
successfully prosecuted.
93. Subsection 70.5A(4) provides that section 12.6 of the Criminal Code applies in
relation to an offence against subsection (1) as if the reference in section 12.6 to an
employee, agent or officer of a body corporate included any associate of the body corporate.
This would mean that the general principle of 'intervening conduct or event' in section 10.1
of the Criminal Code would not apply. Section 12.6 provides that a body corporate cannot
rely on section 10.1 (intervening conduct or event) in respect of a physical element of an
offence brought about by another person if the other person is an employee, agent or officer
of the body corporate. Subsection 70.5A(4) extends this to also include any associate of the
body corporate (which could include a subsidiary or a controlled entity of the body
corporate).
94. Subsection 70.5A(5) provides that the offence will not apply if the body corporate had
in place adequate procedures designed to prevent:
the commission of the foreign bribery offence against section 70.2 by any associate of
the body corporate, and
any associate of the first person engaging in conduct outside Australia that, if engaged
in in Australia, would constitute an offence against section 70.2.
95. The defendant bears a legal burden in relation to this matter. The justification for
imposing this legal burden on the body corporate is that it would create a strong positive
incentive for corporations to adopt measures to prevent foreign bribery. The standard of
proof the defendant would need to discharge in order to prove the defence is the balance of
probabilities (section 13.5 of the Criminal Code).
96. What constitutes 'adequate procedures' would be determined by the courts on a case
by case basis. It is envisaged that this concept would be scalable, depending on the relevant
circumstance including the size and nature of the body corporate. As noted below, proposed
18
new section 70.5B also provides that the Minister must publish guidance on the steps that
body corporates can take to prevent an associate from bribing foreign public officials.
97. Subsection 70.5A(6) provides that the maximum penalty for an offence against the
new offence of failing to prevent foreign bribery in subsection 70.5A(1) is the greatest of the
following:
100,000 penalty units (as at November 2017, the value of one penalty unit is AUD
210. Accordingly, 100,000 penalty units currently amounts to AUD 21 million)
if the court can determine the value of the benefit obtained by the associate, 3 times
that value
if the court cannot determine the value of that benefit, 10% of the annual turnover of
the body corporate for the 12 month period ending at the end of the month in which
the associate committed, or began committing, the offence.
98. Subsection 70.2(8) provides that extended geographical jurisdiction -- category A
applies to an offence against subsection 70.5A(1). This is defined in section 15.1 of the
Criminal Code. It means the offence would apply where, among other situations, the conduct
which constitutes the offence occurs wholly overseas where the offender is a body corporate
incorporated by or under a law of the Commonwealth or of a State or Territory.
99. New section 70.5B provides that the Minister must publish guidance on the steps that
a body corporate can take to prevent an associate from bribing foreign public officials. This
is intended to assist companies in implementing appropriate measures to prevent bribery
from occurring within their organisations. This guidance would not be legislative in
character, and as such, would not take the form of a legislative instrument.
Item 9 -- Before section 70.6 of the Criminal Code
100. Item 15 insert Subdivision D -- Miscellaneous.
101. New section 70.5C includes the details for determining 'annual turnover' for the
purpose of the maximum penalty for the new foreign bribery offence and the offence of
failing to prevent bribery of a foreign public official. Section 70.5C remains unchanged from
existing subsections 70.2(6) and (7), but is now included in a new section to reflect the
introduction of these new offences.
102. New section 70.5D provides that the question of whether two bodies corporate are
related to each other is to be determined for the purposes of Division 70 in the same way as
for the purposes of the Corporations Act.
Item 10 -- Application of amendments
103. Item 10 provides that the amendments in part 1 and Item 11 below would apply in
relation to conduct engaged in on or after the commencement of this Item. The amendments
would commence six months after the amending legislation receives the Royal Assent to
allow sufficient time for businesses to make any adjustments for the new provisions.
Part 2 - Other amendments
Director of Public Prosecutions Act 1983
19
Item 11 - Subsection 17B(1) (table item 5)
104. Item 11 amends table item 5 in new subsection 17B(1) of the Director of Public
Prosecutions Act 1983 (Cth). This adds section 70.5A (the new offence of failing to prevent
foreign bribery) to the list of offence provisions in relation to which a deferred prosecution
agreement may be entered into. A deferred prosecution agreements scheme would be
introduced pursuant to Schedule 2 below.
Income Tax Assessment Act 1997
Items 12, 13, 14 - Subsections 26-52(2), (2A), (6) and (7)
105. Items 12, 13 and 14 amend the Income Tax Assessment Act 1997 (Cth). The intention
of these amendments is to prohibit a person from claiming a deduction for a loss or outgoing
the person incurs that is a bribe to a foreign public official. This is a continuation of the
current approach of section 26-52 of the ITAA. The amendments revise the relevant
provisions of the ITAA so that the concept of bribery of a foreign public official in that act is
consistent with the concept that is contained in new section 70.2 of the Criminal Code, as
described under Item 6 above.
106. Item 12 repeals the existing definition of a bribe to a foreign public official in
subsection 26-52(2) and substitute it with a new definition consistent with the concept of
bribery of a foreign public official as set out in new subsection 70.2(2) of the Criminal Code.
In particular, Item 12 provides that an amount is a bribe to a foreign public official to the
extent that a person incurs the amount in, or in connection with:
providing, offering, or promising a benefit to another person, or causing the
benefit to be provided, offered or promised to another person (new paragraph
26.52(2)(a)), and
does so with the intention of improperly influencing a foreign public official in
order to obtain or retain business or an advantage (new paragraph 26.52(2)(b)).
107. Item 12 provides that the benefit may be any advantage and is not limited to property.
This is the same definition of benefit used in existing subsection 26-52(2).
108. Existing subsection 26-52(2A) provides that, for the purposes of subsection 26-52(2),
when assessing whether an amount is a bribe a decision maker should disregard whether
business, or a business advantage, was actually obtained or retained. Item 13 replaces the
phrase "a business advantage", with the phrase "an advantage", picking up the language of
new paragraph 26-52(2)(b).
109. Item 14 repeals existing subsections 26-52(6) and (7), and substitute factors to be
disregarded in determining whether influence is improper for the purposes of paragraph
26-52(2)(b). These factors are the same as in new subsection 70.2A(2) of the Crimes Act:
the fact that the benefit, or the offer or promise to provide the benefit, may be, or
be perceived to be, customary, necessary or required in the situation
any official tolerance of the benefit, and
20
if particular business or a particular advantage is relevant to determining whether
influence is improper:
o the fact that the value of the business or advantage is insignificant
o any official tolerance of the advantage
o the fact that the advantage may be customary, or perceived to be
customary, in the situation.
Item 15 - Application of amendments
110. Item 15 provides that the above amendments to the ITAA would apply to a loss or
outgoing incurred on or after the commencement of Part 1 of the this Schedule, meaning
they commence at the same time the new foreign bribery offence in section 70.2 of the
Criminal Code and the other main amendments commence. Although Items 12 to 15
commence on the first 1 January, 1 April, 1 July or 1 October to occur after the end of the
period of 6 months beginning on the day the Act receives the Royal Assent (which is the
standard commencement for amendments to tax legislation), they would apply to a loss or
outgoing incurred on or after commencement of Part 1.
Schedule 2 - Amendments relating to deferred prosecution agreements
Part 1 - Main amendments
Director of Public Prosecutions Act 1983
Item 1 - Before section 1
111. Item 1 establishes 'Part 1' of the DPP Act, entitled 'Part 1 - Preliminary'. This part
includes sections 1 - 5 of the DPP Act.
Item 2 - Subsection 3(1)
112. Item 2 amends subsection 3(1) of the DPP Act to provide definitions for 'approving
officer', 'Commonwealth entity', 'conduct', 'deferred prosecution agreement', 'DPA', and
'secrecy provision'.
Item 3 - Before section 5
113. Item 3 establishes 'Part 2' of the DPP Act, entitled 'Part 2 - Office of the Director of
Public Prosecutions'. This part includes sections 6 - 17 of the DPP Act.
Item 4 - After paragraph 6(1)(fa)
114. Item 4 confers the function of negotiating, entering into, and administering DPAs on
behalf of the Commonwealth to the Director of the CDPP.
Item 5 - After subsection 9(6F)
21
115. Item 5 gives the Director of the CDPP the power to, on behalf of the Commonwealth,
enter into a DPA and do all things necessary or convenient to be done for or in connection
with negotiating, entering into, or administering, a DPA.
Item 6 - After subsection 11(2)
116. Subsection 11(1) of the DPP Act already allows the Director of the CDPP to, by
instrument in writing, give directions or furnish guidelines with respect to the prosecution of
offences against Commonwealth laws to:
the Commissioner of Police of the AFP
the Australian Government Solicitor, or
any other person who institutes or carries on prosecutions or conducts
investigations in relation to offences against Commonwealth laws.
117. Item 6 clarifies that the Director of the CDPP may give directions and furnish
guidelines in relation to the negotiating, entering into, or administering, of DPAs in the way
described in subsection 11(1).
Item 7 - Before section 18
Part 3 of the DPP Act
118. Item 7 introduces 'Part 3' of the DPP Act, comprising new sections 17A - 17K. Part 3
implements a DPA scheme, and is entitled 'Part 3 - Deferred prosecution agreement
scheme'.
Section 17A - Entering into a DPA
119. New subsection 17A(1) provides the Director of the CDPP with the discretion to enter
into an agreement (a DPA) on behalf of the Commonwealth. The subsection provides that
DPAs are not available to individuals. This reflects that the DPA scheme is designed to
address serious corporate crime, rather than criminal offending by natural persons. The
subsection further provides that DPAs can only be negotiated to apply with respect to
offences as mentioned in section 17B.
120. Under new subsection 17A(2), if a DPA has been approved in accordance with the
process in section 17D, criminal proceedings must not be instituted in a federal court or in a
court of a State or Territory in relation to the offences specified in the agreement. This
provision ensures that where a DPA is in force, a party to that DPA will not be prosecuted in
relation to the offences specified in the DPA insofar as those offences might be constituted
by the conduct specified in the DPA (including the agreed statement of facts). Item 7 does
not in any way limit the CDPP's discretion or ability to institute criminal proceedings
pursuant to any Commonwealth law in relation to conduct that is not specified in the DPA.
121. Subsection 17A(3) provides exceptions to the rule in subsection 17A(2). Under these
exceptions, the CDPP may prosecute a party to a DPA in relation to the offences specified in
the DPA if
the Director of the CDPP determines that there has been a material contravention of
the DPA ('material contravention' being defined by the DPA itself, pursuant to
paragraph 17C(1)(e)), or
22
if the party to the DPA provided inaccurate, misleading or incomplete information to
a Commonwealth entity in connection with the agreement; and the party knew, or
ought to have known that the information was inaccurate, misleading or incomplete.
122. The exceptions in subsection 17A(3) apply regardless of whether the DPA is in force
at the time the material contravention or provision of inaccurate, misleading, or incomplete
information is detected. As such, if a material contravention that occurred during the period
the DPA was in force is detected many years after the DPA ceased to be in force, criminal
proceedings may be instituted in relation to the offences in the DPA.
Section 17B - Offences to which a DPA may relate
123. A primary purpose of the DPA scheme is to provide an additional tool to
Commonwealth law enforcement and prosecutorial agencies to address serious corporate
crime. As such, subsections 17B(1) and (2) identify a list of serious corporate criminal
offences (the 'primary offences') and, when read with subsection 17A(1), provide that a
DPA must operate with respect to one or more of these offences.
124. Subsection 17B(3) is designed to ensure that a person is not deterred from seeking a
DPA for fear of prosecution for related, less serious offences that do not fall within the scope
of subsections 17B(1) and (2). The subsection provides the Director of the CDPP with the
discretion to, if they consider it appropriate, negotiate a single DPA that applies with respect
to both of the following:
one or more of the primary offences listed in subsections 17B(1) and (2), and
one or more additional offences that are likely to arise of out of the same conduct that
constitutes or may constitute the primary offence (a 'secondary offence').
125. A DPA may not be entered into in relation to a secondary offence alone. To ensure
that the scheme is primarily utilised to address serious corporate crime, paragraph 17B(3)(b)
provides that the maximum penalty for the secondary offence to which the DPA relates must
be less than the maximum penalty for the relevant primary offence.
Section 17C - Content of a DPA
126. New section 17C relates to the content of DPAs. Subsection 17C(1) establishes a list
of terms and features that must be included in all DPAs. The purpose of this provision is to
enhance consistency in the DPA scheme, and therefore provide possible DPA candidates
with a degree of certainty in relation to the types of terms a possible DPA would include.
These terms and features include a statement of facts that outlines the nature of the
misconduct to which the DPA relates, the last day for which the DPA is in force (being the
day by which the person must have fulfilled all of its obligations under the terms of the
DPA), and the requirements to be fulfilled by the person under the DPA.
127. Furthermore, paragraph 17C(1)(e) provides that DPAs must identify the
circumstances which will constitute a material contravention of that particular DPA. Under
subparagraphs (i) and (ii), the DPA must specify that, at a minimum, a material
contravention will be constituted by the contravention of any term that is specified as a
'significant term' of the DPA, and by a pattern or sequence of contraventions of a term or
terms of the DPA that, considered collectively, are significant.
23
128. Paragraph 17C(1)(f) stipulates that, under a DPA, the party to the DPA must consent
to the Director of the CDPP instituting a prosecution of the party on indictment in the
circumstances described in subsection 17A(3) without the party having been examined or
committed for trial.
129. Subsection 17C(2) provides a non-exhaustive list of terms and features that may be
included in a DPA. The purpose of this provision is to provide possible DPA candidates with
a broad idea of the types of terms that might arise for discussion during DPA negotiations
and might ultimately be included in a DPA. The provision also allows for flexibility during
DPA negotiations, so that each DPA can appropriately reflect the particular facts of the case
at hand.
130. Subsections 17C(3) and (4) refer to the level of financial penalty which should be
included in a DPA. Subsection 17C(3) outlines the factors that the Director of the CDPP
must consider in determining an appropriate financial penalty. Under this subsection, the
Director must consider the severity of the penalty that may be imposed by a court if the
person was convicted of each offence specified in the DPA. However, the Director may also
consider that a measurably lower penalty is appropriate where the party to the DPA
demonstrates a high level of cooperation with the CDPP and other relevant law enforcement
agencies during DPA negotiations, and/or where the party is required to otherwise spend a
significant sum of money to comply with other terms in the DPA.
131. Under subsection 17C(4) (and despite paragraph 17C(1)(d)), the Director of the CDPP
may determine not to include a financial penalty if the Director is satisfied that there are
exceptional circumstances and that it is not in the interests of justice to include such a
penalty. This may be appropriate in circumstances where, for example, the party to the DPA
will nonetheless be required to make an exceptional sum of payments under the DPA, or
where the imposition of a financial penalty would likely bankrupt the party.
Section 17D - Approval of a DPA
132. Section 17D outlines the process by which a DPA must be approved. This process
imposes legislative thresholds and layers of oversight of the DPA process to ensure that each
DPA adequately addresses the misconduct to which it relates (noting that a party to DPA
negotiations may be rewarded for demonstrating a high level of cooperation with
authorities), and that DPAs are not used as a 'get out of jail free card' for corporations that
have engaged in serious corporate crime.
133. Under subsection 17D(1), the Director of the CDPP must refer a DPA that has been
agreed by the parties to an approving officer (as appointed under section 17G) for approval.
Subsection 17D(2) requires the Director to, before providing the draft DPA to an approving
officer, be satisfied that there are reasonable grounds to believe that an offence specified in
the DPA has been committed, and that entering into the DPA is in the public interest. Under
subsections 17D(3) and (4), the approving officer must approve the DPA if they are satisfied
that the terms of the DPA are in the interests of justice and are fair, reasonable and
proportionate.
134. If the approving officer is not satisfied of the factors mentioned in subsection 17D(4),
they must not approve the DPA. If this occurs, the parties may elect to continue to negotiate
the DPA's terms, or either party may choose to withdraw from DPA negotiations. Under
24
subsection 17D(6), the approving officer must give written notice of their decision to either
approve or not approve the DPA to the Director of the CDPP.
135. Under subsection 17D(5), the approving officer must assume that the information set
out in the DPA is true and correct. Accordingly, there will be no need for the parties to prove
the facts as presented to the approving officer. This provision will ensure that the process of
approving the DPA is efficient and that the matter of approval is quickly resolved. The facts
as identified in the DPA will be the product of careful consideration and investigation by
Commonwealth agencies.
136. Subsections 17D(7) - 17D(9) impose requirements for the publishing of an approved
DPA. These provisions provide that the Director of the CDPP must publish an approved
DPA on the CDPP's website within 10 business days after the day notice of an approving
officer's decision to approve a DPA is given. Subsection 17D(8) gives the Director the
power to not publish the DPA, or to publish a redacted version of the DPA, if the Director
considers it appropriate to do so in the interests of justice. Subsection 17D(9) provides a
non-exhaustive list of examples where the Director may decide not to publish the DPA in
accordance with subsection 17D(8). Under subsection 17D(10), if the Director has made a
decision under subsection 17D(8), the Director may, at a later time, decide to publish the
DPA or a redacted version of the DPA if the Director considers it would be in the interests of
justice to do so.
Section 17E - When a DPA is in force
137. Section 17E describes when a DPA is in force, such that parties are required to
comply with the DPA's terms. Subsection 17E(1) provides that a DPA enters into force on
the day after notice of approval of the DPA is given by an approving officer. The subsection
also specifies the circumstances within which a DPA ceases to be in force. Paragraph (a)
provides that the DPA ceases to be in force on the day specified in the DPA. Under
paragraph (b), the DPA would also cease to be in force on the day that the person is given
notice of the initiation of criminal proceedings of a kind mentioned in subsection 17A(2).
138. Subsection 17E(2) ensures that the DPA is not in force for the period between the day
the person is given notice that criminal proceedings have been instituted and, should the
decision that a material contravention has occurred be successfully challenged in court, the
day that the court declares that the Director's determination that a material contravention has
occurred was not validly made. This provision avoids a situation in which the corporation
would be taken to have been obliged to comply with the DPA's terms after the CDPP
institutes proceedings on the basis of a material contravention, at which point the DPA
would appear to have not been in force as a result of subsection 17E(1)(b).
139. An intended application of subsection 17E(2) is demonstrated by the following
example. The Director determines that Company X has materially contravened a DPA, and
institutes criminal proceedings on the basis of this determination. Company X seeks judicial
review of this determination (under the Constitution, section 39B of the Judiciary Act).
Although Company X does not consider that a material contravention has occurred, it stops
complying with its obligations under the DPA because it considers that complying with the
DPA may be contrary to its interests given the imminence of criminal proceedings in relation
to the matters contained in the DPA. The court subsequently determines that the Director's
determination that a material contravention occurred was not validly made, such that the
Director never had the power to institute proceedings (because a valid determination of
25
material contravention is required under subsection 17A(3)). The DPA therefore never
ceased to be in force by reason of paragraph 17E(1)(b) (which also requires the Director's
valid determination that a material contravention occurred). Subsection 17E(2) would apply,
and ensure that Company X cannot be taken to have been bound by the DPA in the period
between the day the person is given notice that criminal proceedings have been instituted and
the day that the court declared that the Director's determination that a material contravention
had occurred was not validly made. As a result, the CDPP cannot institute fresh proceedings
on the basis that the company materially contravened the DPA by not complying with the
DPA's terms whilst judicial review proceedings were on foot.
140. Subsection 17E(3) addresses how a variation to an already approved DPA enters into
force. Subsection 17E(4) provides that if a DPA ceases to be in force (including in the
circumstances described in paragraph 17E(1)(b)), the validity of anything done by a party to
the DPA in accordance with the terms of the DPA is unaffected. The effect of this provision
is that, for example, if the person has made payments in accordance with a term of a DPA,
the person cannot claim that the payment should be compensated or returned to the person as
a result of the DPA ceasing to be in force.
Section 17F - Varying a DPA
141. Section 17F describes the process through which a DPA may be varied after it has
been approved by an approving officer. The provision also outlines the requirements relating
to the publishing of a DPA as varied. These processes and requirements are consistent with
the equivalent provisions in section 17D.
Section 17G - Appointment of approving officers
142. Section 17G introduces a process for the appointment of 'approving officers', who are
responsible for approving DPAs under section 17D and approving variations to DPAs under
section 17F. Under subsections 17G(1) and (2), the Minister may appoint a person as an
approving officer for the purposes of the DPA scheme so long as the Minister is satisfied
that the person is a former judicial officer of a federal court or a court of a State or Territory
and the person has the knowledge or experience necessary to properly exercise the powers of
an approving officer. Such knowledge or experience may include an extensive amount of
judicial experience, and/or legal experience in corporate criminal law or corporate
compliance.
143. Subsection 17G(3) provides that an approving officer holds office for the period
specified in the instrument of appointment, and that this period cannot exceed 5 years. There
is no limit on the number of persons who may hold office as an approving officer at any
given point in time. Under subsection 17G(4), the approving officer is to be paid
remuneration as determined by the Minister in writing. Subsection 17G(5) is included to
assist readers by highlighting that a determination as described in subsection 17G(4) is not a
legislative instrument within the meaning of subsection 8(1) of the
Legislation Act 2003 (Cth).
Section 17H - Evidence
144. Section 17H limits the admissibility in proceedings of specific documents that are
likely to be generated or provided to Commonwealth agencies during the course of DPA
negotiations, and/or in compliance with a DPA. This provision is designed to encourage a
26
person who is negotiating, or considering negotiating, a DPA to engage in full and frank
discussions with the CDPP. To encourage to a person to engage openly and honestly in
negotiations, these protections apply regardless of whether the DPA negotiations ultimately
result in a DPA.
145. Subsection 17H(1) restricts the admissibility of specified documents in civil or
criminal proceedings against a person who is or was a party to a DPA or negotiations for a
DPA. These documents are described in paragraphs 17H(1)(a) and (b) as any document that
indicates the person entered into negotiations for a DPA and any document that was created
solely for the purpose of negotiating the DPA. The DPA itself it is exempt from these
categories of documents. Subsection 17H(2) provides examples of the types of documents
that would fall within the scope of paragraphs 17H(1)(a) and (b).
146. Subsections 17H(3)-(5) are intended to create a real likelihood of a successful
prosecution if a party to a DPA engages in the conduct described in subsection 17H(3). The
subsections therefore provide additional incentives for a party to a DPA to enter into DPA
negotiations in good faith and make all possible efforts to comply with the DPA's terms. To
this end, subsection 17H(3) provides exemptions to the rule established by subsection
17H(1), so that all information obtained through a DPA process can be used against a party
to a DPA if the party materially contravenes a DPA, provides false and misleading
information as described in paragraph 17A(3)(b), or gives inconsistent evidence in another
proceeding. Assurance of the likelihood of a successful prosecution is further achieved by
subsection 17H(5). This subsection provides that the agreed statement of facts (which is a
compulsory element of all DPAs) will constitute agreed facts for the purposes of section 191
of the Evidence Act 1995 (Cth) in any criminal proceedings instituted in circumstances
mentioned in subsection 17A(3); or in proceedings under the Proceeds of Crime Act 2002
(Cth) that are instituted after the institution of criminal proceedings in the circumstances
mentioned in subsection 17A(3). The effect of this provision is that, in the proceedings
mentioned in subsection 17H(5), the CDPP would not be required to prove the existence of
the facts in the statement of facts and neither party would be able to adduce evidence to
contradict or qualify an agreed fact unless the court gives leave.
147. Subsection 17H(4) clarifies that section 17H does not affect the admissibility in
evidence of any information or document obtained as an indirect consequence of disclosure
of, or any information contained in, a document mentioned in subsection 17H(1). This
subsection ensures the admissibility of evidence which is brought to the attention of
Commonwealth entities as an indirect result of information disclosed during DPA
negotiations. This provision might, for example, apply where the AFP uses information
disclosed by a person during DPA negotiations to open a new investigation or line of inquiry
and the CDPP seeks to admit the evidence found as a result of that new investigation or
inquiry in relevant proceedings.
Section 17J - Destroying evidence
148. Section 17J(1) creates a new criminal offence. The offence has two physical elements:
(1) the book, document, or thing is relevant to negotiating a DPA or assessing compliance
with a DPA, and (2) the person causes the book, document, or thing to be prevented from
being used in negotiating a DPA, assessing compliance with a DPA, or from being used in
evidence in criminal proceedings of a kind mentioned in subsection 17A(2). The section
does not specify a fault element for the first physical element, and therefore recklessness
27
applies as the default fault element under subsection 5.6(2) of the Criminal Code.
Subsection 17J(2) provides that the fault element for the second physical element is
intention.
149. This provision would apply where, for example, a person destroys or defaces a book,
document or thing with the intention of concealing the extent of the DPA party's misconduct
in DPA negotiations so that the DPA's terms do not adequately reflect the extent of the
party's offending. It would also apply where a person destroys a document that shows that
any person has not complied with its DPA, with the intention of preventing the document
from being used to assess compliance with the DPA.
150. The penalty for an individual convicted of an offence under section 17J is
imprisonment for 5 years or 300 penalty units, or both. The penalty for a body corporate is
5,000 penalty units. The penalty for an individual is consistent with the fine/imprisonment
ratio specified in the Guide to Framing Commonwealth Offences, Infringement Notices and
Enforcement Powers (the Guide), being that five penalty units should equate to one month of
imprisonment.
151. The Guide also contemplates that, as per subsection 4B(3) of the Crimes Act, the
maximum penalty that can be imposed on a body corporate is five times higher than the
penalty that can be imposed on a natural person. Section 17J deviates from this principle by
imposing a higher penalty for corporations. This is justified on the basis that a higher penalty
reflects the significance of a situation in which a corporation might deliberately exploit the
DPA process to manipulate the CDPP in relation to the extent of its misconduct and
therefore achieve disproportionately favourable DPA terms. This would undermine a key
purpose of the DPA scheme, being to enhance the extent to which corporations are held to
account for their misconduct. Furthermore, corporations involved in a DPA are likely to be
well-resourced, and therefore a higher maximum penalty is required to ensure that the
provision acts as an effective deterrent and punishment. On this basis, the provision is
consistent with the principle in the Guide which specifies that each offence should have a
'maximum penalty that is adequate to deter and punish a worst case offence' (page 37).
Section 17K - Disclosure of information
152. Section 17K ensures that, where a Commonwealth entity, or an official of a
Commonwealth entity, obtains information as a result of the negotiating, entering into, or
administering of a DPA, this information can be disclosed in such a way that promotes the
efficient enforcement of laws, administration of justice, and business of government
agencies.
153. Subsection 17K(1) provides that the section applies if a person is, or was, an official
of a Commonwealth entity and obtains information of a kind mentioned in subsection (2).
Subsection 17K(2) identifies the type of information that falls within the scope of section
17K. This information is any information that is obtained as a direct result of the negotiating,
entering into, or administering of a DPA. This is intended to cover all information that is
obtained during DPA negotiations (noting that these negotiations formally occur between the
corporation and the CDPP as per the CDPP's powers and functions to negotiate DPAs in
items 4 and 5), as well as all information that is provided by the corporation to relevant
Commonwealth agencies while the DPA is in force.
28
154. Subsection 17K(3) provides that the person (as described in subsection 17K(1)) may
disclose the information to:
an authority of a Commonwealth entity for the purposes of assisting the entity to
exercise its powers, or perform its functions or duties
an authority of a Commonwealth entity or an authority of a State or Territory or a
foreign country for law enforcement purposes, or for the protection of public health,
or the life or safety of an individual or group of individuals, and
a court or tribunal, authority or person that has the power to require the answering of
questions or the production of documents for the purposes of proceedings before, or in
accordance, with an order of, the court, tribunal, authority or person.
155. Subsection 17K(5) provides that section 17K applies despite any other secrecy
provision, whether enacted before, at, or after the commencement of section 17K.
Section 17L - Disclosure of certain information to the Director
156. Currently, various Commonwealth laws allow investigative agencies to provide
information obtained through investigative powers to the CDPP for purposes relating to a
prosecution for an offence, or relating to a decision on whether or not to prosecute an
offence. Section 17L provides that where a Commonwealth law authorises the disclosure of
information to the Director in relation to a prosecution, that law also has the effect of
allowing for the disclosure and use of that information for the purposes of negotiating,
entering into or administering a DPA. This ensures that relevant investigative agencies can
provide the CDPP with information to inform the Director's decision to offer, or not offer a
DPA, and to assist the Director to assess compliance with a DPA.
157. The Director's decisions to offer, or not offer, a DPA constitutes an extension of the
existing discretion as to whether or not to prosecute a matter. Indeed, DPAs represent an
alternative to prosecution and, at any point prior to an approving officer's approval of a
DPA, the CDPP may decide that it would be more appropriate to commence a prosecution
than to offer a DPA. It is therefore appropriate that information that can be disclosed for
purposes relating to prosecution can also be disclosed and used for purposes relating to DPA
negotiations or for the administration of an approved DPA.
158. In section 17L, the term 'in relation to a prosecution' is broadly phrased to
encompass, for example, the disclosure of information to inform decisions whether or not to
prosecute or to support an imminent or ongoing prosecution. The term 'for the purposes of
negotiating, entering into or administering a DPA' is also intended to cover a broad range of
purposes, including the determination of appropriate terms for a DPA, consideration of
whether it is appropriate to offer a DPA and assessment of compliance with a DPA's terms.
159. A possible application of section 17L is demonstrated by the following example. The
Australian Federal Police obtain information through the execution of a search warrant under
Part IAA of the Crimes Act 1914. Paragraph 3ZQU(1)(a) allows for the use and sharing of
that information by a constable or Commonwealth officer for the purpose of 'preventing,
investigating or prosecuting an offence'. As a result of section 17L (and on the basis that this
information may be shared for the purposes of prosecuting an offence), this information may
29
also be disclosed to and used by the Director for the purposes of negotiating, entering into or
administering a DPA.
Part 4 of the DPP Act
160. Item 7 also identifies the start of the new 'Part 4' of the DPP Act, which starts
immediately before section 18. As a result of item 8, part 4 consists of sections 18 - 30 of
the DPP Act. Part 4 is entitled 'Part 4 - Director, Associate Director and staff'.
Item 8 - Before section 31
161. Item 8 establishes a new 'Part 5' of the DPP Act, entitled 'Part 5 - Miscellaneous'.
This part comprises sections 31 - 34 of the DPP Act.
Item 9 - Subsection 31(1)
Item 10 - After subsection 31(1A)
162. Items 9 and 10 collectively allow the Director of the CDPP to, in writing, delegate his
or her functions and powers related to the DPA scheme to a member of the staff of the office
who is a member of the senior executive service and a legal practitioner. Under
subsection 31(1AAA), the Director can delegate any of his or her powers under Part 3 except
for the powers and functions under subsections 17B(3), 17C(4), 17D(8), and 17F(7). The
effect of these exemptions is that the Director must not delegate, but must personally
execute:
the decision to enter into a DPA with respect to one or more of the secondary offences
listed in section 17B(3)
the decision under subsection 17C(4) that a DPA need not include a financial penalty
on the basis where the Director is satisfied that there are exceptional circumstances
and it is not in the interests of justice to include such a penalty
the decision under subsection 17D(8) not to publish a DPA or to publish a version of
the DPA that does not disclose the name of the person or any other material the
Director considers should not be disclosed, and
the decision under subsection 17F(7) to not publish the DPA as varied or to publish a
version that does not disclose the name of the person or any other material that the
Director considers should not be disclosed.
163. The decisions described in subsections 17B(3), 17C(4), and 17D(8) are decisions of
significant gravity with respect to ensuring that the DPA scheme is primarily used to address
serious corporate crime, and to ensuring the transparency of, and public confidence in, the
scheme. As such, it is appropriate that only the Director of the CDPP is empowered to make
these decisions.
Item 11 - Application provision
164. Item 11 ensures that a DPA can be entered into with respect to an offence mentioned
in section 17B regardless of whether the conduct that may constitute that offence occurred
before, on, or after the commencement of the Bill.
30
Part 2 - Consequential amendments to tax law
A New Tax System (Goods and Services Tax) Act 1999
Item 12 - After paragraph 69-5(3)(e)
165. Item 12 is a consequential amendment to the A New Tax System (Goods and Services
Tax) Act 1999 to ensure that a party to a DPA cannot claim input tax credits for a loss or
outgoing incurred under a term of a DPA.
Income Tax Assessment Act 1997
Item 13 - Section 12-5 (after table item headed "debt interests")
Item 14 - After section 26-5
166. Items 13 and 14 are consequential amendments to the ITAA to ensure that any loss or
outgoing incurred by a corporation under a term of a DPA is not deductible under the ITAA.
Item 15 - Application provision
167. Item 15 provides that items 13 and 14 apply in relation to the income year in which
Part 1 of Schedule 2 commences and later income years. The item also provides that item 12
applies in relation to the tax period in which Part 1 of this Schedule commences and later tax
periods.
Part 3 - Other consequential amendments
Administrative Decisions (Judicial Review) Act 1977
Item 16 - After paragraph (xa) of Schedule 1
168. Item 16 amends Schedule 1 to the ADJR Act to provide that the ADJR Act does not
apply to decisions under Part 3 of the DPP Act. As such, judicial review under the ADJR Act
will not be available for decisions including:
the Director's decision to enter into a DPA (section 17A)
an approving officer's decision to approve or not approve a DPA (section 17D), or a
variation to a DPA (section 17F)
the Director's decision not to publish a DPA (section 17D) or a variation to a DPA
(section 17F), and
the Director's decision that he or she is satisfied that there has been a material
contravention of the DPA (subsection 17A(3)).
169. The exemption to the ADJR Act in item 16 is supported by strong policy
justifications. The exemption of DPA-related decisions from ADJR Act review is consistent
with existing policy that decisions to prosecute are exempt from ADJR Act review. Indeed,
the DPA scheme represents a new dimension to prosecutorial decision-making, in that
prosecutors will consider whether a DPA would be an appropriate alternative to prosecution
31
in appropriate cases. Throughout DPA negotiations, the CDPP will consider whether it
would be more appropriate to prosecute the corporation, rather than to offer a DPA.
170. Paragraph (xa) of Schedule 1 of the ADJR Act exempts 'decisions to prosecute
persons for any offence against a law of the Commonwealth, a State or Territory' from
ADJR Act review. The Administrative Review Council (ARC) considered this exemption in
its 2012 report, Federal Judicial Review in Australia, and considered that this exemption
should be retained. The ARC noted that this exemption 'is justified by the potential
disruptive effect on criminal proceedings' (page 227) and by 'the desirability of not allowing
delays in criminal proceedings' (page 228).
171. Allowing for ADJR Act review of DPA-related decisions could give rise to some of
the concerns raised by the ARC in the context of the decision to prosecute. Namely, allowing
for ADJR Act review could cause a disruptive effect on prosecutorial decision making by
causing delays in DPA decision making and therefore creating uncertainty in relation to the
availability and content of a DPA, and in relation to whether prosecution would be a more
efficient way of addressing the misconduct. On this basis, it is appropriate that decisions
made pursuant to the DPA scheme are exempt from ADJR Act review.
172. The exemption in item 16 is further justified on the basis that common law judicial
review (under section 75(v) of the Constitution and section 39B of the Judiciary Act)
represents a much more efficient review option for decisions under the scheme, particularly
with respect to the Director's decision that he or she is satisfied that there has been a material
contravention of the DPA. It is expected that the offences specified in section 17B would
ordinarily be prosecuted in the relevant State or Territory Court, given that the Federal Court
does not have general jurisdiction over criminal prosecutions under Commonwealth laws
(see section 39B(1A)(c) of the Judiciary Act). By virtue of section 39B of the Judiciary Act,
a matter concerning common law judicial review of this decision would be determined by
the same court that would determine the corporation's guilt for the offences contained in the
DPA. By contrast, review under the ADJR Act would generally be considered by the Federal
Court or the Federal Circuit Court. This could lead to significant delays and disruption in
circumstances where the determination of criminal guilt for the matters contained in the
DPA fall within the jurisdiction of a State or Territory Supreme Court.
173. Item 16 is further justified by the voluntary nature of a party's participation in the
DPA scheme, and the availability of traditional law enforcement mechanisms as an
alternative to the DPA process. The scheme is designed to provide corporations with a more
desirable outcome than what would be achieved if the corporation was prosecuted for the
offences specified in the DPA, and therefore to incentivise self-reporting of serious corporate
crime. A potential DPA candidate will be able to consider whether the absence of ADJR Act
review would adversely impact its interests to the point that the scheme no longer represents
a desirable alternative to a criminal investigation and prosecution. In such a circumstance,
the corporation could determine not to seek a DPA.
Crimes Act 1914
Item 17 - After paragraph 16A(2)(fa)
174. Item 17 amends subsection 16A(2) of the Crimes Act so that, in determining an
appropriate sentence for offences that were the subject of a DPA that was materially
contravened, a court must consider the fact that a person entered into a DPA in relation to the
32
offence and the extent to which the person complied, or failed to comply, with the terms of
the DPA. This provision allows a court to impose a sentence that reflects the extent to which,
if at all, the corporation maliciously exploited the DPA process to avoid prosecution. The
provision also allows a court to consider the extent to which a corporation has complied with
the DPA's terms and to make sure this is accounted for in the sentence imposed, if
appropriate.
Item 18 - Application provision
175. Item 18 provides that items 16 and 17 apply in relation to conduct occurring before,
on, or after the commencement of Part 3 of the Bill.
33