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Thursday, 2 July 1998
Page: 4678


Senator HEFFERNAN (11:27 AM) —On behalf of Senator Coonan, I present the 15th report of the Joint Standing Committee on Treaties relating to the Comprehensive Nuclear Test Ban Treaty and treaties tabled on 1 April and 12 May 1998, and the 16th report entitled OECD Convention on Combating Bribery and draft implementation legislation , together with submissions, transcripts of evidence and minutes of proceedings. I seek leave to move a motion in relation to these reports and to incorporate the tabling statement in Hansard .

Leave granted.


Senator HEFFERNAN —I move:

That the Senate take note of the reports.

The statement read as follows

The Report I have just tabled is the Committee's response to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions , and to the draft enabling legislation which was also referred to us by the Minister for Justice.

The Convention has been seen as a first step against international corruption which is a major global problem. Corruption can take many forms, including extortion, nepotism, cronyism, bribery and money laundering. It can be active or passive, ranging from active involvement to `turning a blind eye'.

The effects of corruption can include distortions to trade, reduced economic competitiveness and fraudulent enrichment of elites in developing countries. It can extend to impacts on fragile economies and systems of government, and has played a part in causing many of the problems currently found in Asian and South East Asian countries.

The OECD has 29 members and five other nations are also interested in this Convention. This is not a large group and, for example, it does not include any developing nations or South East Asian nations. The Committee agrees with those witnesses who stressed the importance of a multi-lateral approach to the global problem of corruption.

It has recommended that Australia undertake through diplomatic channels the cooperation of other OECD members to work towards increasing the number of adherents to the Convention. Adherence to the Convention and passage of complementary domestic legislation should also be raised by Australia with members of the South Pacific Forum and the Association of South East Asian nations.

The Committee has recommended that Australia should sign and ratify the Convention as soon as practicable.

We also consider that the draft enabling legislation, the Criminal Code Amendment (Bribery of Foreign Public Officials) Bill 1998, as amended by our recommendations, be introduced into the Parliament as soon as practicable. The Committee is of the view that the legislation will be both more effective and enforceable if its recommendations are adopted.

The scope and objectives of the Bill are limited to dealing with `grand corruption'. Many witnesses addressed a wide range of issues in their submissions and verbal evidence. Because of the narrow scope and objectives of the Bill, it was not always possible to consider some of these matters, but the contribution made by all those who forwarded sub missions and gave evidence has been very much appreciated.

Among the many matters raised by the Convention and the draft Bill which were addressed and on which we made recommendations, two of the most important and conceptually difficult were the treatment of facilitation benefits and jurisdiction. The Committee believes that the approach it has suggested in each of these matters in particular will increase the effectiveness and enforceability of the Bill.

Facilitation benefits .

Facilitation benefits are small payments or benefits provided in some countries to public officials for non-discretionary, routine governmental actions, such as the connection of a telephone, in order to carry out business.

The Bill provides two options for dealing with facilitation benefits:

. that the amount of the benefit was less than a threshold amount, yet to be specified, and

. a formulation which would leave the decision about a particular benefit to a jury by specifying that the benefit was `small'.

The Committee did not favour the option of providing a threshold amount for a facilitation benefit. There is an obvious difficulty in capping a transaction that may be paid by instalments. Moreover, currency fluctuations might turn a transaction which is a permissible facilitation benefit one day into a prohibited bribe the next.

Nor were we attracted to leaving facilitation benefits to prosecutorial direction on the basis that a benefit was `small' and not worth pursuing, or that prosecution would be too difficult or too expensive to pursue a relatively minor offence. Another criticism of this option was that a small payment in some circumstances may be a large benefit in others.

An alternative approach can be found in the US Foreign Corrupt Practices Act of 1977, as amended in 1988. Based on a purposive approach, this provides an exception to a charge of bribery if the benefit was paid for provision of a `routine governmental action', such as the provision of a document to which the payer would have been entitled to in any event.

It is clear that many Australian businesses and individuals have to provide facilitation benefits to carry on business overseas. The Committee accepts that there should not be potential exposure to criminal convictions for such conduct. We consider that the legislation should therefore spell out as clearly as possible that it is the purpose for which a benefit is provided which could make it illegal, rather than the amount.

Jurisdiction .

The offence created by the legislation applies to conduct within and outside Australia, unless providing or offering the benefit occurs wholly within Australia. That is, it provides a territorial nexus so that, to establish an offence, there must be a territorial connection with Australia or it territories.

Once it is accepted that the conduct sought to be proscribed is essentially international criminal activity likely to take place wholly outside Australia, the question is whether imposing a territorial nexus as a precondition to the exercise of jurisdiction over such an offence will render the legislation ineffective and unenforceable.

In an increasingly globalised world, it is the Committee's belief that both effectiveness and enforceability would be reduced if jurisdiction was limited to only partial territoriality. We therefore consider that the Bill's objectives will be met more effectively if there is extra-territorial jurisdiction defined on as wide a basis as possible. The Report therefore recommends extension of jurisdiction for the proposed offence to any of territoriality, nationality, residence, place of incorporation or business operation.

We have also recommended extension of jurisdiction on as wide an extra-territorial basis as possible to the ancillary offences to the primary offence of attempt, complicity, incitement and conspiracy to bribe, where they relate to conduct proscribed in the offence which occurred or was planned or expected to occur in Australia.

Because conduct leading to the offence will almost always occur overseas, the Committee is aware that investigation and prosecution of alleged offences will be expensive. This could have significant resource implications for both the Australian Federal Police and the Director of Public Prosecutions.

The Report includes recommendations on such other topics as the definitions in the draft Bill, resolution of any inconsistencies between the Bill and the legislation of the States and Territories, and examination of the feasibility of an education program to be undertaken by the Government with peak industry bodies about the provisions of the draft legislation.

This inquiry was the first occasion on which draft enabling legislation had been referred to the Committee, together with a treaty. It has proved to be a worthwhile and challenging task, and I would like to thank all of my colleagues who participated in the inquiry.

I commend the Report to the Senate.


Senator HEFFERNAN —I seek leave to continue my remarks later.

Leave granted; debate adjourned.