It will not be news to readers that regulators have been increasing their focus on corporate misconduct, and that leading businesses have been strengthening their risk management framework across a range of white collar and regulatory matters (whether that be sanctions, industry related regulation, tax and financial obligations compliance, or matters such as health and safety, privacy and minimum employment terms). For many corporates these trends have been an additional drive to put in places risk mitigation such as whistleblowing hotlines and increased compliance training and processes.

One area where this increased focus continues, and where we think further regulatory focus is inevitable, is in the area of anti-bribery and corruption (AB&C).

Recent Australian law amendments: Shifting the corporate liability landscape for foreign bribery and corruption 

Over the past 24 months Australia has undertaken major reforms to its AB&C to align with international best practice. Following the establishment of the National Anti-Corruption Commission in 2023, last year saw Australia implement the second major anti-corruption reform with the passing of the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024 (the CFB Act) (which came into force in September 2024).

The CFB Act amended Australia’s Criminal Code and significantly shifted the corporate liability landscape for foreign bribery and corruption in Australia. Companies are now exposed to a wider set of anti-bribery and corruption compliance risks and a greater need to ensure policies and procedures are fit for purpose.

In summary, the CFB Act widens the reach of foreign bribery laws in an attempt to addresses previous criticism regarding the low number of foreign bribery convictions in Australia, which has seen only a handful of corporations and individuals convicted for foreign bribery since the enactment of foreign bribery laws in 1999. The CFB Act does this by:

• widening the existing offence for bribing foreign public officials so that the advantage sought may be of a personal or business nature and treating candidates for public office as foreign public officials; and
• widening the definition of an “associate” to include anyone who performs services on behalf of the company. Previously companies were only liable for its officers, employees, and agents.

However, the standout change is the creation of a new offence for failing to prevent bribery of a foreign public official by an associate. This has been modelled off the similar offence contained in the United Kingdom’s Bribery Act 2010. What makes this new offence significant is that it is an absolute liability offence. This means a company can now be successfully prosecuted even if they had no knowledge of the bribery and did not intend for the bribery to occur.

A company will have a defence to the offence if it can prove it had “adequate procedures” in place designed to prevent the bribing of a foreign public official. 

What the Australian reform means for New Zealand business 

It appears that there is one thing about the Australian reforms that is not well understood in New Zealand – namely that the Australian reforms are really brining AB&C regulatory principles into trans-Tasman alignment and the world leading jurisdiction, the United Kingdom. 

Under New Zealand law, following amendments to the Crimes Act 1961 in 2015, there is a presumption that a body corporate commits any wrongdoing committed by an employee or agent, unless the organisation can show that it took “reasonable steps” to prevent the offence. This is very similar to the “adequate procedures” defence now introduced in Australia.

So, if we have already had this in place, how does the Australian reform really effect NZ business?

Well, since 2015 the AB&C regulator in New Zealand, the Serious Fraud Office, has been increasingly active with investigations and prosecutions. It is yet to take a prosecution against a corporate for, effectively, failing to take “reasonable steps” to prevent bribery, but in our view it is only a matter of time. And with recent reform in Australia, and presumably a push by Australian authorities to progress their new standards, we consider it inevitable that the SFO will look to prosecute its first corporate in this area, potentially in cooperation with their Australian partners. 

Further, any New Zealand business with a presence in Australia, is now going to under the new Australian AB&C regime. In our view, these two matters combine to mean that there is renewed need for New Zealand business to review its position on AB&C, and to ensure it has in place “adequate procedures” around AB&C awareness, training, investigation and reporting, to ensure it is able to aval itself of a “reasonable steps” to prevent bribery defence if that is necessary. 

Increasing consistency of global anti-bribery and corruption requirements 

The Attorney-General of Australia has issued official guidance on what constitutes “adequate procedures” to prevent foreign bribery. As noted above, Australia’s new foreign bribery laws closely mirror those in the United Kingdom’s Bribery Act 2010. For this reason, the guidance issued by the Attorney-General of Australia share a number of similarities with the guidance issued by the United Kingdom’s Secretary of State for Justice. In summary, similar to the UK’s guidance, Australia’s guidance focuses on 6 core elements in establishing “adequate procedures”: 

• fostering a control environment to prevent foreign bribery;
• responsibilities of top-level management;
• risk assessment;
• communication and training;
• reporting foreign bribery; and 
• monitoring and review.

The guidance recommends that companies put in place controls that are proportionate to their operations, including the level of its exposure to foreign bribery risks and its business activities, which includes the relationship between the company and its contractors.

Staying ahead of the curve

Preventing bribery is self-evidently good for your business. It addresses matters of ethical standards (expected by the market, and your employees and business partners), and avoids the risk of individuals and the business being caught up in scandals and legal investigations and prosecutions.

The SFO and the New Zealand Police have joint responsibility for investigating bribery matters. As set out in the SFO’s most recent strategic areas of focus and public comments before Christmas, we expect foreign bribery and corruption of public officials will remained a key area of focus for the SFO throughout 2025.

Given that continued focus, the law reform here in 2015 creating a de facto ‘failure to prevent’ offence, and the recent reforms in Australia (aligning NZ and Australia with the UK and other leading offshore jurisdictions), we consider it is only a matter of time before the first NZ corporate is prosecuted for failing to prevent bribery. You don’t want that corporate to be you. 

To avoid that risk, and to stay ahead of this regulatory curve, we recommend a review of your business practices with an AB&C lens applied. You should ensure that your risk management procedures adequately deal with your AB&C risk, and ensure that your staff, and those who work with you, are fully aware of the risks and expectations in this space. Proactive management of risks, in case litigation arises, or to avoid litigation, is also strongly advisable.