News reports occasionally contain stories about individuals with influence in tendering processes who receive “kickbacks” for giving favourable treatment to certain tenderers. This can sometimes take the form of a tendering party receiving an invoice for “consulting services” of some type from a company associated in some way with the individual with influence in the tendering process. The invoice is paid and accounted for in the tenderer’s books, which then receives favourable treatment in the tender. The funds are then moved from the invoicing company in some way into the pocket of the individual with influence. On the surface, the payment can look legitimate but a bribe has been concealed.
In Australia, it often takes investigatory work of an anti-corruption watchdog to expose such activity. Political pressure then increases for prosecuting bodies to eradicate such practices and punish the offenders.
The Federal Parliament has recently made that task easier by enacting the Crimes Legislation Amendment (Proceeds of Crime and Other Measures) Act 2016. While mainly directed at the bribery of foreign public officials, the Act also has broad application domestically. The Federal Criminal Code has been amended to prohibit a company or an individual making, altering, destroying or concealing an accounting document:
- with the intention to facilitate, conceal or disguise the giving or receipt of a payment not legitimately due to a person; or
- reckless to the fact that doing so will have that effect.
Intentional individual offenders face 10 years imprisonment and/or a fine of $1.8 million. Recklessness can lead to five years imprisonment and/or a $900,000 fine. Intentional corporate offenders face fines the greater of $18 million, three times the value of the benefit gained or 10 percent of the corporation’s annual turnover if the value of the benefit cannot be determined. The fines are half for reckless corporate offenders.
Companies (and their directors) that do not review systems and cultures in their organisations that could allow such behaviour to occur may find themselves investigated and prosecuted on the basis of recklessness alongside the actual perpetrators of the bribery.
At Everingham Solomons, we advise and assist businesses to comply with their ever-increasing legal obligations because Helping You is Our Business.
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