House of Representatives

Second Reading Speech

Mr Williams (Attorney-General)

I move:

That this bill be now read a second time.

The purpose of the bill is to amend the Criminal Code Act 1995 to provide for new offences prohibiting the bribery of foreign officials within and outside Australia by Australians or companies incorporated in Australia. The offences are designed to implement the OECD Convention on Combating Bribery of Foreign Officials in International Business Transactions, which is a very significant response by the international community to the problem of transnational corruption.

The provisions of the proposed bill would enable Australia to ratify the convention.

The bill now before the House was passed by the Senate on 13 May 1999 with several amendments which were moved by the opposition and accepted by the government and others in the Senate.

I am very pleased that the bill was passed by the Senate with the support of all groupings in the Senate.

The message that is sent to the international community about our attitude to corruption is very important in a world where trade between different countries is increasingly influencing domestic policy.

The government certainly looks forward to being able to report to the OECD that Australia has passed the implementing legislation with the support of all groupings in our parliament.

The bill is very much one of the consequences of globalisation. We live in a time of unparalleled social and cultural interactions which demand that we have an international perspective in relation to our ethical and value systems as well as the conduct of business. I believe the bill and subsequent ratification of the convention will convey a message to the world and the Australian community that the parliament takes the problem of bribery seriously. There are those who believe official corruption is part of the way of life in some countries. However, it is almost always illegal and I doubt that it really reflects the true community values of the country concerned. However, where laws are not enforced for any reason, corruption will thrive.

While an organised international response has taken some time to materialise, the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions is a very significant initiative. OECD countries account for approximately 80 per cent of global GDP. The OECD includes the world's three largest trading nations - the United States, Germany and Japan - and includes all major European countries, South Korea, Canada, Mexico, New Zealand and Australia.

In December 1996 the United Nations General Assembly adopted a Declaration Against Corruption and Bribery in International Business Transactions. Indeed, the United Nations Economic and Social Council Commission on Crime Prevention and Criminal Justice continues to monitor progress on implementation of the declaration. The effort to combat international corruption is not limited to the OECD. Indeed, five countries that are not members of the OECD - Argentina, Brazil, Chile, Bulgaria and the Slovak Republic - have signed the convention. So there is scope for many more countries to join the international effort to stamp out corruption.

It is important that Australia should support the OECD's initiative to combat the bribery of foreign public officials and take a principled stand against corruption. While I am sure we would all agree it will not completely solve the problem of corruption, implementation of the convention will reduce it and provide a strong statement about Australia's values and our confidence in the soundness of those values.

There is good business sense, as much as morality, in introducing this legislation. Bribery distorts attempts at international competitive bidding, bribes themselves are non-productive and are therefore paid from profits and bribes distort trade in that contracts are not based on merit and can lead to production of poor quality goods and services. In the aid context, bribery can lead to a very poor selection of projects, and this can in turn lead to diversion of resources away from areas of greatest need.

Australia considers this to be a serious international issue which is best tackled by multilateral action, and Australia considers it important that it be in a position to be part of that multilateral effort. The bill therefore follows the requirements of the OECD convention on these matters and, as such, keeps our standards in line with those proposed for other highly industrialised countries.

The great majority of the other OECD countries either have passed the necessary legislation or are in the process of doing so. Indeed the convention was able to come into force on 15 February 1999 because sufficient countries have passed the implementing legislation and ratified the convention. These include Germany, Japan, the USA, Korea and Canada.

As honourable members may be aware, an earlier version of the bill and the convention was examined in detail by the Joint Standing Committee on Treaties whose report was tabled on 2 July 1998. The government is very appreciative of the contribution that the committee's report has made to this issue and believes that the bill introduced is consistent with the report's recommendations.

I particularly thank the now retired chairman of the Joint Standing Committee on Treaties, Mr Bill Taylor, the former member for Groom, and other members for giving consideration of the convention priority and for their comprehensive public consultations. I also thank Senator Helen Coonan for her important work as chair of the OECD bribery subcommittee.

I believe that the government's establishment of a process for careful examination of and consultation on treaties prior to their signature is working well and ensures there is a full and wide appreciation of what is involved in the obligations before Australia is bound by them. The consideration of this particular convention is an example of how well that process works.

The bill proposes that the Criminal Code Act 1995 be amended by inserting part of a new chapter 4 into the Criminal Code which prohibits the bribing of a foreign public official. The main provision is clause 70.2. Subclause 70.2(1) prohibits providing or offering a benefit which is not legitimately due to another person with the intention of influencing a foreign public official in the exercise of his or her duties.

For it to be an offence, the benefit must also be provided or offered in order to obtain or retain business or obtain or retain a business advantage that is not legitimately due to the recipient or intended recipient. The maximum penalty is 10 years imprisonment, which is consistent with the penalty recommended for the same type of offence in the Model Criminal Code.

Subclauses 70.2(2) and 70.2(3) make it clear that something is not legitimately due just because the benefit or business advantage may be customary or because of its value or official tolerance of corruption. Clause 70.3 provides for a defence. A person cannot be guilty of the offence if the activity is lawful in the country of the foreign public official. I would doubt whether corrupt activities would be lawful in many countries; however, it follows that there should be a defence in those circumstances.

Clause 70.4 provides for another defence. It provides that a person is not guilty if the person's conduct was engaged in for the sole or dominant purpose of expediting or securing a routine government action of a minor nature and the value of the benefit was of a minor nature. The bill concerns large scale bribes which warrant special offences which reach beyond the usual jurisdictional reach of governments. Small payments are something left for local officials to stamp out, and it is not appropriate or practical for foreign governments to be concerning themselves with expensive international prosecutions. This approach reflects what is provided for in the convention and is similar to legislation in the United States and Canada.

Clause 70.4 also requires those wishing to rely on the defence to produce a contemporaneous record of the payment to establish their bona fides. I agree with the Joint Standing Committee on Treaties that there should be strict recording requirements, and the bill requires compliance with these before the defence can be utilised.

Clause 70.5 deals with the extraterritorial reach of the proposed bill. Consistent with the recommendations of the Joint Standing Committee on Treaties, the bill has been adjusted to reflect the overwhelming majority view of submissions that jurisdiction should be based not only on there being some territorial connection to Australia but on whether the accused is an Australian citizen or a body corporate incorporated by, or under, an Australian law.

The bill was amended in the Senate to also cover conduct outside Australia by residents of Australia who are not citizens of Australia because there was concern that some people who are long-term residents of Australia could not be prosecuted. I expect that the same practice will be adopted in relation to residency jurisdiction as has been adopted in relation to the similar residency jurisdiction provision in the child sex tourism legislation - namely, that proceedings will be commenced only where the person has been resident in Australia for at least two years.

It is the government's view that persons who are residents of Australia but not citizens of Australia at the time of the conduct should primarily be the responsibility of their home jurisdiction where the conduct is outside Australia. Accordingly, where the home jurisdiction has its own legislation in place, it would be the preference of the Australian government that proceedings be commenced against the person by their home jurisdiction.

Clause 70.6 is a savings clause in relation to other relevant laws, including state and territory laws. In some circumstances there will be an overlap with state and territory secret commissions offences. The government would not want to disturb any prosecution which is initiated under state or territory legislation. I expect in the vast majority of cases the prosecutions will be initiated under the proposed legislation because it has a higher penalty.

I believe this bill will make a significant contribution to Australia's ability to influence the conduct of international business transactions to ensure that decisions are made on the basis of the merits of the product or service and not on the basis of extraneous matters which have no place in development of trading and business relationships. In any case, the bill is also morally right and should be enacted on that basis alone. I commend the bill to the House and present the explanatory memorandum.