No more envelopes under the table

Australian businesses making transactionary payments in overseas markets will soon be subject to harsh penalties. Just how this fits with encouragement to move into new offshore markets is unclear.

Last year was an active one for law enforcers on the foreign bribery and corruption front.

Australian business finds itself in a new era – an era where law enforcers around the world are pursuing bribery and corruptions cases with renewed vigour and with increased cross-jurisdictional dialogue and cooperation. It is also an time when payments that in the past may not have been bribery will now certainly constitute bribery under UK law, and may also soon be bribery under Australian law.

Any Australian business that operates in countries where demands for small payments to lubricate regulatory and other public processes is common are now faced with a risk to the business, its employees and its directors, and a dilemma in how they deal with business transactions in these countries going forward. The dilemma is underscored by mind-boggling penalties for getting it wrong.

On 1 July last year, after much fanfare (and more than a little gnashing of teeth) the UK Bribery Act came into force. On the same day, the Commonwealth DPP laid charges in relation to Securency International, Note Printing Australia and a number of individuals under Australian bribery legislation – charges which are yet to be determined by the courts. And in November, the Attorney General’s Department released a public consultation paper inviting comment on the government’s review of Australian anti-bribery legislation, with particular focus on the treatment of facilitation payments under Australian law.

Presently, if a charge is brought in relation to a payment made to a foreign public official that would otherwise be classified as a bribe under Australian law, it will be a complete defence if the payment was a ‘facilitation payment’.

To be a facilitation payment, the value of the payment must be minor, it must have been paid for the dominant purpose of securing or expediting a routine government function which itself is of a minor nature, and as soon as practicable after the payment a record (which satisfies particular legal requirements) must be made – the most difficult of these being that the payor must effectively obtain a receipt from the foreign official.

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