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Crimes Legislation Amendment (Combatting Corporate Crime) Bill 2017

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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.

·          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 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.

 

 



 

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

 

 

 

 

 

 



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.

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 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 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.

 

                                                            

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.



44.              

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.

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 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 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

·          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 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).

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 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 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

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

·          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)

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

·          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.

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 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 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 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 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.

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 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.

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 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 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.