Crimes Legislation Amendment Combatting Corporate Crime Bill 2019 Webinar Presentation
Julian Hunn Troy Nicholson Financial Crime Compliance Consultant Director, Business Development FCC Solutions Satori Group
Pu Purpose of the Bill: • amending the existing offence of bribery of a foreign public official in the Criminal Code • implementing a Commonwealth deferred prosecution agreement (DPA) scheme; and • repealing the existing definition of 'dishonest' in the Criminal Code and inserting a new definition of 'dishonest' into the Code's Dictionary • introducing a new offence of failure of a body corporate to prevent foreign bribery by an associate
Cor Corpor orate of offence of f of failing t g to p o prevent f for oreign gn b bribery The Bill proposes a new corporate offence of failing to prevent foreign bribery. This offence would automatically trigger the liability of a corporation where an associate of the corporation commits a foreign bribery offence, under section 70.2 of the Criminal Code, for the profit or gain of the corporation. However, the offence would not apply if the corporation has adequate procedures in place designed to prevent its associates from committing foreign bribery. Wh What are the penalties? s? The penalty for failing to prevent bribery is proposed to be consistent with the penalty for a corporation that commits a foreign bribery offence under section 70.2 of the Criminal Code. The maximum penalty would be whichever is greater of the following: • $21 million three times the value of benefit obtained, or • • 10% of the company’s annual turnover
Co Corporations can be liable for foreign bribery y by y employe yees, associates and agents where: • the company’s board of directors, or a high managerial agent of the company intentionally, knowingly or recklessly committed the foreign bribery offence • the company’s board of directors, or a high managerial agent of the company expressly, tacitly or impliedly authorised, or permitted the commission of, the foreign bribery offence by an agent of the company • an agent of the company offered a bribe and it is shown that a corporate culture existed within the company that directed, encouraged, tolerated or led to the commission of the foreign bribery offence, or • an agent of the company offered a bribe and it is shown that the company failed to create and maintain a corporate culture that required compliance with the laws against bribing foreign public officials.
‘Associ ciate’ is defined under the Bill as follows: A person is an associate of another person if the first-mentioned person: 1. is an officer, employee, agent or contractor of the other person; or 2. is a subsidiary (within the meaning of the Corporations Act 2001) of the other person; or 3. is controlled (within the meaning of the Corporations Act 2001) by the other person; or 4. otherwise performs services for or on behalf of the other person. Wh Where does s this s law apply? Australia’s foreign bribery laws have extra-territorial effect and apply to conduct occurring: 1. in Australia, and 2. outside Australia, where the offence is committed by an Australian citizen or resident, or by an Australian corporation (incorporated by or under a law of the Commonwealth or of a state or territory).
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‘ Ad Adequate proce cedures’ Decisions in the UK and US have considered what constitutes ‘adequate procedures’ to prevent the commission of a bribery offence, and these cases provide useful guidance within the Australian context. The following factors have been identified as relevant in determining whether or not a company has taken ‘adequate steps’ to prevent the commission of a bribery offence by their associates: • A ‘culture of compliance’ and genuine engagement with anti-bribery obligations • Quality of policies and training • Dedicating a role to focus on compliance with anti-bribery obligations • Record keeping • Recognition of higher risks in some jurisdictions • Subsidiaries • Independent reports
Co Companies of all sizes should put in place: Effect ctive Pr Proportionate Proce cedures to prevent bribery from occurring within their business. 'Proportionate’ the policies and procedures a corporation implements to prevent foreign bribery should be proportionate to the corporation’s circumstances , including its foreign bribery risks, its size and the nature of its activities 'Effective' are procedures that are operationalised effectually, including through the development of a robust culture of integrity, a clear pro-compliance tone from the top, a strong anti-bribery compliance function, effective risk assessment and due diligence procedures, and careful and proper use of third parties Five main indicators of an effectively implemented compliance program to prevent foreign bribery are: 1. a robust culture of integrity within the corporation 2. demonstrated pro-compliance conduct by top level management and the board of directors 3. a strong anti-bribery compliance function 4. effective risk assessment and due diligence procedures, and 5. careful and proper use of third parties.
Th The 'fu fundam amental al ele lements' for in inclu lusio ion in in every co corporation's anti-br bribe bery framework a. Risk assessment b. Management dedication c. Due diligence d. Communication and training e. Confidential reporting and investigation, and f. Monitoring and review
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Su Summar ary of UK UK an and US US cas ase la law regar ardin ing ‘ad adequate procedures’ to pr prevent br bribe bery by associates Skansen Interiors Ltd ( SI SIL ), the defendant, was a small refurbishment company mainly operating in London. Its parent company, Skansen Group, employs approximately 30 people De Dedi dicat ated an d anti-bri bribe bery co compliance function The prosecution in this case noted that SIL had not designated anyone with an antibribery compliance role. This case indicates that, even small companies, with no compliance function, are expected to assign such a responsibility to an employee. Im Impl plementat ation n of po policies is key SIL did have policies in place which emphasised the need to deal with third parties in an ethical, open and honest manner. However, SIL was unable to prove that its staff had read the policies or that they had been reminded periodically of their existence and requirements. Do Docum ument c compl plianc ance and k and keep re p records rds o of al all s steps t tak aken SIL had no records of any compliance discussions or steps taken
Rolls Royce was found to have engaged in a bribery scandal between 1989 and 2013. The activities spanned 7 countries over 24 years, and involved bribing government officials in a number of countries to secure orders. Cu Culture of Co Compliance & & Training 1. The conduct involved senior Rolls-Royce employees 2. The failure on the part of Rolls-Royce to instil within the wider business a culture of Compliance especially in jurisdictions all of which could objectively be seen as having a high corruption index perception 3. The offences were multi-jurisdictional, numerous and spread across Rolls-Royce’s defence aerospace, civil aerospace and energy businesses; 4. Training was minimal and sporadic;
SF SFO v St Standard Bank [2 [2016] ] Lloyd’s Rep. . FC Plus 122 16 16 Po Policies and Training It was held that Standard Bank did have some systems in place, but that they were not adequate because: 1. the policy was ‘unclear’ and ‘not reinforced effectively’; and 2. the training did ‘not provide sufficient guidance about relevant obligations and procedures’ in situations where two entities within the banking group were involved in a transaction, and the other entity engaged a third party consultant Lord Justice Leveson indicated that relevant factors in awarding a DPA included: a) the promptness of the self-report; b) the fully disclosed internal investigation and cooperation; c) the agreement for an independent review of anti-corruption policies; and d) that Standard Bank is now differently owned.
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Due Diligence Module Risk Triage Process Customers Risk Assessment Rating Monitor Suppliers Real time Employees Or Set Frequency Risk rate based on • Adverse media Automated Ø Country Slavery Workflow • Ø Volume Ø High Bribery & & • Ø Products Ø Medium Corruption Dashboard Etc. Ø Low sanctions Visualisation • Transactions
QUESTIONS If you have further questions please don’t hesitate to contact us: Julian Hunn Troy Nicholson FCC Solutions Satori Group julian.hunn@yahoo.com tnicholson@satorigroup.com.au 0400 664 663 0425 328 383 https://satorigroup.com.au/financial-crime-management www.satorigroup.com.au
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