Jurisdiction - Australia
Reports and Analysis
Australia – “Private” Bribery.

2 April, 2015

Recent press relating to alleged bribes paid in the context of procurement of IT services are a timely reminder that criminal offences exist under Australia law for bribery even where there are no public officials involved.  Companies frequently, and understandably, focus on interactions with public officials when considering compliance measures to prevent bribery and corruption, but it is important that this is not the sole focus. 

In What Circumstances Is “Private” Bribery A Criminal Offence?


Whilst the provisions relating to bribery of foreign public officials are contained in Commonwealth legislation, the provisions which capture “private” bribery offences are contained in State and Territory law.  There are common elements between the offences in each jurisdiction but the wording of each statute does vary.  


One example is section 249B of the Crimes Act 1900 (NSW) which relevantly requires the following elements for an offence to be committed:


•  a benefit to be corruptly given or offered to an agent, or for the agent to corruptly receive or solicit a benefit; 
•  the benefit be offered or received as an inducement or reward for doing or not doing something, or showing or not showing favour or disfavour to any person; 
•  the inducement or reward is in relation to the business affairs of the agent’s principal.   


The “benefit” may be monetary or maybe anything of value, such as gifts or hospitality. An “agent” includes a employee, an independent contractor or a third party agent.  


These types of arrangements are sometimes referred to as “kickbacks” or “secret commissions”.  An example of where an offence may be committed is:


•  an employee of X Company (e.g. the head of procurement), accepts cash, or something else of value, from Y Company;
•  in return the employee of X Company agrees to select Y Company as the company which will supply goods or services to X Company.

Another example is where the head of procurement gives Company Y a copy of the other tenders submitted for that service so that Company Y has an advantage in the tender process.  

In these scenarios, the head of procurement (the recipient of the benefit) and Company Y (the provider of the benefit) both potentially commit a criminal offence.  


Company X (the principal) does not commit a criminal offence.  However, Company X can clearly suffer reputational damage particularly where there is media coverage relating to the allegations.  Public scrutiny inevitably centres on the failure of internal processes to prevent the misconduct. It is possible that reputational damage could negatively impact Company X’s share price to the extent that a shareholder class action results.  In some circumstances Company X may also face civil action (for example from a company who lost out on the tender).  


What Can Be Done To Minimise The Risks


The risks that exist in private sector dealings, as well as the risks that arise from dealing with public officials, should be taken into account when developing your company’s compliance programme including when:


•   undertaking risk assessments; 
•   preparing policies in relation to gifts, hospitality, entertainment and travel;  
•   developing procurement procedures and guidelines; 
•   monitoring the implementation of company guidelines; 
•   training employees; 
•   undertaking due diligence on third party agents, particularly agents involved in the procurement process; and  
•   undertaking due diligence for joint ventures or acquisitions. 


Whilst there will always be the potential for rogue employees and agents to enter into these types of arrangement for their own personal benefit, companies can minimise the risks by the use of tailored and effective compliance programmes incorporating these steps.  


Baker McKenzie


For further information, please contact:


Georgie Farrant, Partner, Baker & McKenzie

[email protected]


Angela Svenson, Baker & McKenzie

[email protected]


Homegrown Regulatory & Compliance Law Firms in Australia


International Regulatory & Compliance Law Firms in Australia 

Comments are closed.