As our Australian readers will no doubt be aware, the Australian Government last week outlined a proposal to ban facilitation payments, launching a consultation paper as part of its review of facilitation payments under Australian law.  The bribery of foreign public officials is prohibited under section 70.2 of the Australian Criminal Code, with corporate offenders facing fines of A$11 million or 3 times the value of the benefits obtained, whichever is the greater.  Individuals face up to 10 years imprisonment or fines of up to A$1.1million.

Section 70.4 of the Criminal Code sets out a defence for facilitation payments, which is inconsistent with the international trend towards the prohibition of such payments and as highlighted in the consultation paper, puts Australian companies at greater risk of being found liable for acting outside the law e.g. where the operations of Australian companies also fall within the scope of the UK Bribery Act.

The Australian Minister for Home Affairs and Justice, Brendan O’Conner, has acknowledged the strong difference of opinion that exists in Australia over whether or not to allow the exemption to remain in place, with some believing that Australian business would be put at a competitive disadvantage if the defence was to be abolished.  However, Mr. O’Conner has also noted that the defence is inconsistent with Australia’s commitment to offering aid and assistance, particularly in the Asia-Pacific region.

The ban would bring Australian anti-corruption laws into closer alignment with the UK Bribery Act, which is another step towards levelling the international playing field for British companies, although according to Transparency International’s Bribe Payers Index 2011, Australian companies are already perceived as being less likely to pay bribes than UK or US companies, coming in 6th equal with Canada. 

Notably my home country and neighbour to Australia in the South Pacific, New Zealand, also maintains an exemption for facilitation payments (see the New Zealand Crimes Act, s105C (3)).  New Zealand’s economy is not large enough for it to feature on the Bribe Payers Index, but it is ranked 1st equal with Denmark and Singapore in Transparency International’s Corruption Perceptions Index 2010, meaning it is one of the countries in the world where you are least likely to find corruption.  Given that facilitation payments are a form of bribery and are illegal in the countries where they are paid, the New Zealand Government may follow Australia’s lead in looking to bring its anti-corruption legislation in line with international standards.  After all, we should not expect to behave overseas in a way that we would not tolerate at home.

There is also talk of the US Government revising its stance on facilitation payments, which would certainly be consistent with the aggressive enforcement of the FCPA.  Many of the US based organisations we work with ban facilitation payments, regardless of the US exemption, in particular because it is so difficult to know where the line is to be drawn.

We await with interest the outcome of the consultation in Australia.  The Australian Government invites all interested parties to submit their views of the matters outlined in the consultation paper by close of business on 15 December 2011.