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Quarterly update: Corporate crime, anti-bribery and corruption in Australia

16 December 2020

#Dispute Resolution & Litigation

Published by:

Katerina Stevenson

Quarterly update: Corporate crime, anti-bribery and corruption in Australia

In 2020, the nation’s focus has undoubtedly been centred on the COVID-19 pandemic. The pandemic itself has brought a range of challenges and risks for companies as they navigate the changed business environment and the pressures that COVID-19 has caused, both economic and operational.     

Despite the focus that the Commonwealth government has had on the pandemic, it took some positive steps in its reform agenda in the last quarter, including releasing draft legislation for the long-awaited Commonwealth Integrity Commission. 

Legislation updates

Commonwealth Integrity Commission

On 2 November 2020, the Commonwealth Government released draft legislation regarding the proposed Commonwealth Integrity Commission (CIC). The CIC’s proposed powers include:

  • compelling people to give sworn evidence at hearings
  • compelling the production of information and documents
  • searching people and properties under warrant
  • arresting people
  • using surveillance devices including tapping phones.  

The CIC will expand the powers of the Australian Commission for Law Enforcement Integrity. Although this is a positive step in the government’s reform agenda, a number of shortcomings in the proposed model have already been identified, such as the potential limits in the scope of its powers to investigate corruption. The consultation period runs until 12 February 2021.

Those ‘regulated entities’ caught within the proposed powers of the CIC (such as ACIC, the AFP, higher education providers and certain research bodies who receive Commonwealth funding) should take this opportunity to consider whether they would like to respond. It is also a timely reminder for these bodies to look at their risk and governance policies and programs to ensure that they are adequate.

Anti-money laundering Bill passed by Parliament

On 10 December 2020, the Anti-Money Laundering and Counter-Terrorism Financing and Other Legislation Amendment Bill 2019 (AML Bill) was passed by both Houses. It implements reforms arising from the recommendations of the Report on the Statutory Review of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 and associated Rules and Regulations.

The AML Bill seeks to strengthen Australia’s anti-money laundering and counter-terrorism financing regime, including expanding the circumstances in which reporting entities may rely on customer identification and verification procedures undertaken by a third party and requiring banks to conduct due diligence assessments before entering, and during, all correspondent banking relationships. It is anticipated that these reforms will also create regulatory efficiencies.   

Affected companies should ensure that they are aware of, and comply with, their reporting obligations and ensure that their anti-money laundering risk and compliance programs are up to date. 

Reviews

Corporate criminal responsibility regime                                               

On 10 April 2019, the Commonwealth Attorney-General asked the Australian Law Reform Commission (ALRC) to conduct a comprehensive review into the Commonwealth corporate criminal responsibility regime, including to identify reforms that could effectively hold corporations to account for criminal misconduct. The final report, Corporate Criminal Responsibility, was tabled in Parliament on 31 August 2020. The ALRC proposed 20 recommendations, which if adopted, would involve far-reaching legislative reform. Our update on the ALRC Review can be found here.

Review of the legislative framework for corporations and financial services regulation

As part of the suite of initiatives the Commonwealth government laid out in its response to the Hayne Royal Commission, it asked the ALRC to inquire into the potential simplification of the laws that regulate financial services in Australia. The ALRC inquiry, known as the Review of the Legislative Framework for Corporations and Financial Services Regulation, seeks to develop a clear and efficient framework of legislation to achieve meaningful compliance with the substance and intent of the law. 

The Terms of Reference focus primarily on the Corporations Act 2001 (Cth) and the Corporations Regulations 2011 (Cth). Three interim reports will be submitted to the government as the review progresses. The first will focus on the use of definitions in corporations and financial services legislation, the second will focus on regulatory design and the hierarchy of primary law provisions and the third will focus on the potential restructuring of Chapter 7 of the Corporations Act (which deals with financial services and markets). An in-depth discussion of the review can be read here.

ASIC enforcement agenda

In September 2020, ASIC released its enforcement update for January to June 2020. ASIC acknowledged the impact that the COVID-19 pandemic has had on the financial system, adopting a number of pandemic-specific priorities to address misconduct, opportunistic conduct and egregious governance failures, among other issues. A number of ASIC’s activities were affected by the pandemic. It also continued to prioritise matters arising out of the Banking Royal Commission, commencing a number of civil penalty cases. Despite the delays arising out of the pandemic, it is clear that ASIC is still intending to pursue its enforcement work, as well as its strategy of ‘Why not litigate?’

ASIC also released its Corporate Plan for 2020-2024 in September 2020. ASIC’s short-term focus will be on addressing the impact of the pandemic, including opportunistic behaviour preying on vulnerable consumers, maintaining the financial system’s resilience and stability, and enforcement action against the most harmful conduct. It is also clear that ASIC intends to pursue its ‘Why not litigate?’ strategy over the longer term. Other focuses include improving entities manager of key risk to mitigate consumer harm, predatory lending and misconduct by company directors.      

Recent cases

In September 2020, a number of executives were committed to stand trial in the Supreme Court of NSW on foreign bribery charges arising out of their employment with Jacobs Group (Australia) Pty Ltd (formerly known as Sinclair Knight Merz).

In November 2020, the Australian Federal Police (AFP) arrested and charged a former executive of Leighton Holdings with offences of foreign bribery and falsifying books. The AFP has also issued arrest warrants for two additional executives understood to be overseas. It commenced its investigation regarding Leighton Holdings in 2013.

Author: Katerina Stevenson

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.

Published by:

Katerina Stevenson

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