GIFTS, ENTERTAINMENT, TRAVEL AND TRAINING...To be found in breach, it is not necessary to prove that business, or a business advantage, was actually obtained or retained . Subsections

GIFTS, ENTERTAINMENT, TRAVEL AND TRAININGCOMPLIANCE WITH ANTI-BRIBERY REGULATION IN ASIA PACIFIC

August 2016

LEGAL GUIDE FIFTH EDITION

CONTENTS

page

Herbert Smith Freehills is a Hong Kong partnership which is affiliated to Herbert Smith Freehills LLP (an English limited liability partnership). Herbert Smith Freehills LLP, its subsidiaries and affiliates and Herbert Smith Freehills, an Australian Partnership, are separate member firms of the international legal practice known as Herbert Smith Freehills.

The contents of this publication, current at 21 July 2016, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.

© Herbert Smith Freehills 2016

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 02Impact of overseas anti-bribery laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 03Australia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .09China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30India . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Indonesia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .50Japan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57Macau . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65Malaysia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .73Myanmar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .80Philippines . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .86Republic of Korea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93Singapore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .103Taiwan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .111Thailand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .118Vietnam . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .126Key contacts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133Authors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .137

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HERBERT SMITH FREEHILLS02 COMPLIANCE WITH ANTI-BRIBERY REGULATION IN ASIA PACIFIC

INTRODUCTION

Welcome to the fifth edition of our Guide to Compliance with Anti-bribery Regulation . This edition has been reworked to cover Asia Pacific and focuses on practical issues for individuals and corporates when offering or receiving gifts, entertainment, travel or training . It also deals with charitable donations, benefits offered to third parties, and the impact of authorisation on liability .

With the World Bank recently estimating that USD 1 trillion is paid each year worldwide in bribes, this guide is timely . Bribes take many forms . Indeed, we are increasingly seeing law enforcement agencies turn their attention to non-money benefits, in particular, gifts, hospitality, donations, travel perks, conferences and tours . Our review reveals that:

the line between acceptable relationship building and bribery is not easy to draw and depends very much on the local laws and enforcement regimes applicable in the jurisdiction(s) in question . Typically, there is public sector guidance with applicable gift and hospitality thresholds . Whilst almost universally not binding on offerors, such guidance may be influential, both in terms of the approach taken by law enforcement agencies and the setting of internal compliance policies .

the surrounding circumstances must always be assessed . For example, has internal consent for the gift been sought and if so does this mitigate potential liability? Might the meal in fact be intended to influence a discretionary decision by the recipient? Does the payment of international travel and accommodation as part of a conference package give rise to a conflict of interest or the inference of corrupt intent?

in terms of legal and practice developments, a number of governments (for example in the Republic of Korea and Vietnam) are enacting far-reaching legislation to substantially widen the scope of applicable bribery offences . We are also seeing the adoption of corporate offences, for example in the Republic of Korea and Thailand, drawing on the UK Bribery Act . Finally, there has been an uptick in both the prosecution of private sector bribe givers, as well as an increased appetite to prosecute pure private sector bribery .

To mitigate the risks of breach, it is clear that companies should have clear internal policies on gift giving and hospitality . Benefits should be provided in an open and transparent manner and be properly recorded to avoid the inference of corruption .

Ultimately, exchanging modest gifts and offering reasonable hospitality are business tools that can promote corporate goodwill and enhance working relationships . However, caution must be exercised to avoid allegations of improper behaviour .

This guide navigates the underlying law and practice in 15 jurisdictions, with summary checklists at the end of each chapter . We also address the position under the US Foreign Corrupt Practices Act and the UK Bribery Act . These long-arm statutes are regularly invoked, increasingly in respect of non-monetary benefits .

I extend my thanks to the firms who have assisted with this guide .

This publication complements others in this series, notably our 2015 Guide to Anti-corruption Regulation in Asia Pacific and our 2015 Global Anti-corruption Report . As always, we welcome feedback from our readers . Please get in touch with me with any questions or comments .

Kyle WomboltPartnerGlobal head of Corporate Crime and InvestigationsHerbert Smith Freehills

August 2016

HERBERT SMITH FREEHILLS 09COMPLIANCE WITH ANTI-BRIBERY REGULATION IN ASIA PACIFIC

AUSTRALIA

VIETNAM

THAILAND

TAIWAN

SRI LANKA

SOUTH KOREA

SINGAPORE

PHILIPPINES

PEOPLE’S REPUBLIC OF CHINA

PAKISTAN

NEW ZEALAND

NEPAL

MYANMAR

MONGOLIA

MAURITIUS

MALAYSIA

MACAU

LAOS

KOREAJAPAN

INDONESIA

INDIA

HONG KONG

CHINA

CAMBODIA

BANGLADESH

AUSTRALIA

Australia is a common law country with both federal (national) and state and territory (regional) laws . This chapter focuses on public sector bribery laws in the federal sphere . Private sector bribery is predominantly regulated by state and territory laws .

Australia’s primary federal anti-bribery laws are found in the Criminal Code Act 1995 (Cth) (Commonwealth Criminal Code) . The Commonwealth Criminal Code prohibits bribery of foreign and Commonwealth public officials . It is an offence to bribe a foreign public official . It is also an offence to bribe a Commonwealth public official or for a Commonwealth public official to receive a bribe . Bribery of state and territory officials is addressed in various state and territory laws .

Australian law does not stipulate which gifts, entertainment, travel and training are legal and illegal . Nor does it impose any particular dollar thresholds as to the acceptable value of gifts, entertainment, travel or training . Consequently, the provision of such benefits needs to be judged in accordance with the factual context within the regulatory framework . There is also some guidance available in the codes of conduct or policies which regulate Australian civil servants or officials .

PART 1 – THE LEGAL FRAMEWORK1. WHAT ARE THE MAIN ELEMENTS OF THE

BRIBERY OFFENCES IN AUSTRALIA?

Bribery of a foreign public official

It is an offence under section 70 .2 of the Commonwealth Criminal Code to bribe a foreign public official . The elements of the offence are as follows:

person A provides, offers or promises to provide a “benefit” to person B which is "not legitimately due" (or causes such a benefit to be offered, promised or provided); and

person A does so with the intention of influencing a foreign public official, who may or may not be person B, in the exercise of the official's duties, in order to obtain or retain business, or obtain or retain a business advantage that is "not legitimately due" .

To be found in breach, it is not necessary to prove that business, or a business advantage, was actually obtained or retained .

Subsections 70 .2(1)(a)(ii) and (iv) provide that the offence extends to a person that causes a benefit to be provided or offered . This means that gifts and hospitality provided through a third party, such as an agent, can amount to an offence .

A "benefit" for these purposes is widely defined . It is not limited to property and includes anything of advantage . A “benefit” can be large or small and can be non-monetary or non-tangible .

As to whether a benefit is “not legitimately due”, the following must be disregarded (section 70 .2(2)):

the fact that the benefit may be, or be perceived to be, customary, necessary or required in the situation;

the value of the benefit; and

any official tolerance of the benefit .

These same factors are to be disregarded in determining whether a business advantage is “not legitimately due” .

As with other offences under the Commonwealth Criminal Code, a person may be guilty of bribery if he/she aids, abets, counsels or procures the commission of the offence, or conspires or attempts to commit the offence (sections 11 .2 to 11 .5) .

Bribery of a Commonwealth public official

Section 141 .1 of the Commonwealth Criminal Code prohibits bribery of a Commonwealth public official . The elements of the offence are as follows:

person A dishonestly provides, offers or promises to provide a “benefit” to person B (or causes such a “benefit” to be offered, promised or provided);

person A does so with the intention of influencing a public official, who may or may not be person B, in the exercise of the official's duties as a public official; and

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the public official is a Commonwealth public official, and the relevant duties sought to be influenced are those of a Commonwealth public official .

Equally, section 141 .1 prohibits a Commonwealth public official from dishonestly accepting such a benefit with the intention that his/her official duties will be influenced, or of inducing the belief that he/she will be so influenced .

Section 142 .1 prohibits the dishonest offer or provision of, or the dishonest acceptance of, corrupting benefits to or by Commonwealth public officials .

The offences of giving a bribe, or a corrupting benefit, to a Commonwealth public official extend to a person that caused the benefit to be offered or provided . This means that gifts or hospitality provided through a third party, such as an agent, could amount to an offence .

As mentioned above, it is also an offence under state and territory legislation to bribe or corrupt state or territory public officials, as well as for a public official to accept such a bribe or to act corruptly . In addition, state and territory legislation prescribes offences in relation to the corruption of specific officials, such as the judiciary or the police .

The Commonwealth Criminal Code now also includes false accounting offences (section 490) . These may be invoked in bribery related cases .

Private sector bribery offences

Most states and territories have secret commission offences which, broadly speaking, prohibit:

agents from corruptly accepting or soliciting a benefit as an inducement or reward for an act or omission in relation to the principal's business; and

persons from corruptly giving a benefit to an agent with the intention of influencing the principal's business .

Some states and territories also have false accounting type offences that have been relied upon in the context of bribery charges .

Active and passive aspects of the offences

Offering and receiving a bribe involving a Commonwealth public official is prohibited under the Commonwealth Criminal Code . Offering a bribe to a foreign public official is an offence . However, the receipt of such a bribe by a foreign public official is not an offence in Australia . State and territory laws prohibit the giving and receiving of secret commissions .

The requirement of corrupt intent

Although Australian legislation does not use the language of “corrupt intent” (as is contained in US legislation) each of the Australian bribery offences contain a fault element which refers to a person’s intention . They are not strict liability offences . They also embed the concept of “corrupt intent” within their express elements, for example through the terms “dishonestly”, “with the intention to influence”, “not legitimately due”, and “corruptly” .

Australian laws do not specify which circumstances must be present in order for a court to infer that an offeror acted with the requisite intention . A person’s intention can be inferred from the surrounding circumstances and determining whether a particular benefit constitutes a bribe requires an assessment of the

circumstances surrounding the provision of the benefit .

Factors that will be relevant to this assessment include:

the value of the benefit;

the purpose for which the benefit was provided;

whether the benefit was provided to the recipient alone, or to a number of recipients from different organisations;

the relationship between the offeror and the recipient;

any pending business between the offeror or their company and the recipient or (in the case of the secret commissions offences) the recipient's principal;

the recipient's role and level of seniority; and

the level of transparency around the giving and receipt of the benefit .

Corporate liability

A corporation can be subject to criminal liability through the application of statute or common law .

The Commonwealth Criminal Code provides that the anti-bribery provisions apply to individuals and companies . To be liable, a corporation must be attributed with both the physical elements and the mental (or 'fault') elements of an offence .

A physical element of an offence is attributed to a corporation if the conduct was committed by an employee, agent or officer of the body corporate acting within the actual or apparent scope of the person's employment or authority (section 12 .2) .

A body corporate is deemed to have the requisite fault elements of an offence if the body corporate "expressly, tacitly or impliedly authorised or permitted the commission of the offence" (section 12 .3) . Authorisation or permission may be established by proving that the company’s board of directors or a high managerial agent intentionally, knowingly or recklessly carried out the relevant conduct, or expressly, tacitly or impliedly authorised or permitted the commission of the offence .

In the case of a high managerial agent there is a defence if the company proves that it exercised due diligence to prevent the conduct, authorisation or permission .

Authorisation or permission may also be established by proving that a company’s culture encouraged, tolerated or led to the non-compliance with the law or failed to require compliance with the law (section 12 .3) .

Other laws

Various other federal and state laws are relevant to bribery and corruption . These include false accounting, falsification of documents and money laundering laws, which may apply, depending on the circumstances .

2. DO THE LAWS RELATE ONLY TO BRIBES TO THOSE IN THE PUBLIC SECTOR OR ALSO THE PRIVATE SECTOR? WHO FALLS WITHIN THE PUBLIC SECTOR FOR THE PURPOSE OF THE OFFENCES?

The anti-bribery provisions in the Commonwealth Criminal Code prohibit bribery of foreign and Commonwealth public officials . “Foreign public official" includes an employee or official of a foreign

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government body, an individual who performs work for a foreign government body under a contract, and a member of the executive, judiciary or magistracy of a foreign country or of part of a foreign country .

"Commonwealth public official" includes a minister, a member of either house of parliament, a Commonwealth judicial officer, an officer or employee of a Commonwealth authority, and a member or special member of the Australian federal police .

Private sector bribery is primarily regulated by state and territory laws . The formulation of these offences differs between states . Broadly speaking, the offences prohibit a person from corruptly offering or giving a benefit to an agent as an inducement or reward for an act or omission in relation to the principal’s business .

3. DO ANTI-CORRUPTION LAWS IN AUSTRALIA HAVE EXTRA-TERRITORIAL EFFECT?

Yes . The offence of bribery of a foreign public official applies where the conduct occurs wholly or partly in Australia, or, where the conduct is committed wholly outside Australia, the conduct is committed by Australian citizens or residents or companies incorporated in Australia .

The offence of bribery of a Commonwealth public official applies whether or not the conduct constituting the alleged offence occurs in Australia, and whether or not a result of the conduct constituting the alleged offence occurs in Australia .

Private sector bribery laws in some states and territories have extended extra-territoriality provisions .

PART 2 – GIFTS, ENTERTAINMENT, TRAVEL AND TRAININGOVERVIEW

Whilst Australian law does not stipulate which specific gifts or entertainment are legal and illegal, or impose any particular dollar thresholds, guidance can be sourced from various codes of conduct or policies . These regulate Australian civil servants or officials (collectively referred to as ‘officials’) . Those codes or policies commonly restrict the types of gifts or entertainment which officials can accept . Within each jurisdiction, different parts of government and different departments may have their own policies or codes which are relevant to this issue . As a result it is necessary to consider not only the jurisdiction but also the particular department or part of government involved .

In an Australian context, many public sector employers have their own codes of conduct or policy documents . These should always be checked before providing gifts, entertainment, hospitality or travel to a public sector official . Relevant codes and guidelines can change from time to time .

General principlesThe following general principles apply to the provision and receipt of gifts, entertainment, travel and training:

provision of any gift or entertainment needs to be judged both on a case by case basis and on a cumulative basis, having regard to the particular circumstances in which the gift or entertainment is offered or provided .

in no case is it permissible for the provision of the gift or entertainment to be made in return for any action by the relevant official .

gifts or entertainment provided to an official with duties that directly affect the giver at the time of provision of the gift or entertainment are more likely to give rise to a concern about breach Australian law and codes of conduct .

particular caution should be taken where the:

giver is in a contractual or regulatory relationship with the official’s agency; or

primary purpose of the person providing the gift or entertainment is to lobby an official .

while it is generally prudent for officials to disclose or register the approximate value of all gifts or entertainment accepted, ‘valuable’ gifts or entertainment should always be registered by officials . For example, members of federal parliament are ‘required’ to register any gift valued at AUD 300 or more received from a private source .

4. WHAT KINDS OF GIFTS WILL BE CONSIDERED ACCEPTABLE?

Australian law does not prescribe which types of gifts will be acceptable . Whether or not a gift will be considered acceptable depends upon the circumstances of the offer and the roles and responsibilities of the persons involved in the giving and receiving of the gift .1

The Australian Public Service Code of Conduct indicates that a gift or benefit may generally be accepted by Australian Public Service officials if the offer is open to the community, or to the Australian public service as a whole . This is because the risk that the offer could influence, or be perceived to influence, the decisions or actions of an individual in these circumstances is low .

It will also usually be appropriate for an official to accept a gift on behalf of his or her government agency, rather than in the official’s personal capacity .

5. WHAT KINDS OF GIFTS WILL BE CONSIDERED UNACCEPTABLE?

It is never appropriate for an official to accept a gift which gives rise to an actual or perceived conflict of interest . The Australian Public Service Code of Conduct explains that it will generally be inappropriate for an official to accept a gift or benefit from a person or company that is involved in a tender process with the official’s agency, or otherwise subject to a decision at the discretion of, or in the sphere of influence of, that official .2

6. WHAT FORMS OF ENTERTAINMENT/HOSPITALITY WILL BE CONSIDERED ACCEPTABLE?

Australian law does not prescribe which forms of entertainment will be considered acceptable as this will depend on the context .

Some guidance can be drawn from government publications and guidance provided to public officials .

An online learning module on foreign bribery produced by the Australian government advises that the following factors are relevant to determining the appropriateness of the provision of hospitality:

is the hospitality provided to further the recipient’s familiarity with the offeror’s business or products?

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does the company have a clear policy on the provision of gifts and hospitality, and do they comply with that policy?

is the expenditure correctly recorded by the company?

is the expenditure modest and proportionate?

could the hospitality be reasonably suspected of having influence over the recipient’s decision-making process?3

The Australian Public Service Code of Conduct advises that, when deciding whether to accept an offer of entertainment, the official should balance the benefits to his/her agency and the Australian Public Service against the risks that acceptance will entail, such as the risk that acceptance will give rise to a perception that his/her integrity is compromised .4

7. WHAT FORMS OF ENTERTAINMENT/HOSPITALITY WILL BE CONSIDERED UNACCEPTABLE?

Entertainment or hospitality that gives rise to an actual or perceived conflict of interest will be unacceptable . Whether a perceived or actual conflict exists will depend on the context of the entertainment or hospitality .

8. IN TERMS OF TRAVEL/ACCOMMODATION, WHAT IS LIKELY TO BE CONSIDERED ACCEPTABLE?

As travel and accommodation is another form of benefit, it will only be acceptable if it does not give rise to an actual or perceived conflict of interest . Again, this will depend on the circumstances of the offer and the roles and responsibilities of the persons involved .

9. IN TERMS OF TRAVEL/ACCOMMODATION, WHAT IS LIKELY TO BE CONSIDERED UNACCEPTABLE?

As with the above categories, gifts of travel or accommodation will be unacceptable if they give rise to an actual or perceived conflict of interest . The Australian Public Service Code of Conduct notes that where officials accept invitations to attend an event, it will generally not be appropriate for them to accept offers of paid travel or accommodation associated with their attendance .5

The Australian government’s online learning module on foreign bribery also cautions against the payment of lavish travel expenses as one way in which foreign bribery can occur .6

10. COULD EDUCATION/TRAINING BE CONSIDERED A BRIBE? ARE THERE ANY EXEMPTIONS FOR REASONABLE EXPENSES INCURRED IN RELATION TO THE PROMOTION OF PRODUCTS AND SERVICES?

Whether education or training could be considered a bribe will depend on the particular facts of the situation . Key issues are whether there is an intention to influence a public official and whether the benefit is “legitimately due” .7 As a general observation, the more lavish the benefit, the greater the chance that it will draw an inference that the benefit was intended to influence an official .

As a general rule, conferences, seminars and training programmes may be acceptable provided that:

attendance would help the agency achieve its aims or objectives;

no actual or perceived conflict of interest arises; and

no perception of supplier preferential treatment arises .

For example, a one hour seminar provided to a range of people which includes an official, will, on its face, not suggest that it was run with the intention of influencing the official . By comparison, sending a particular official or a member of his/her family to do a master’s degree, could suggest that there is an intention to influence the official .

There is no specific exemption for the provision of products and services . The Australian Public Service Code of Conduct provides that, depending on the circumstances, promotional expenses, as with hospitality expenses, may be considered bribes, particularly if the payment is lavish, disproportionate or over-frequent .8

11. WHAT IF THE GIFT/ENTERTAINMENT/TRAVEL/TRAINING IS GIVEN TO A SPOUSE/ RELATIVE?

A benefit does not need to be provided directly to a public official or private person in order to give rise to a potential offence . Benefits to a spouse or relative with the requisite intention to influence an official or private person can constitute an offence .

12. WHAT IF THE BENEFIT IN QUESTION INVOLVES A DONATION TO CHARITY?

This situation is also fact dependant . If the donation is made with the intention of influencing a public official, it may be considered a bribe . Companies should ensure their processes for approving and making charitable donations take account of this risk .

13. WHAT IF THE GIFT/ENTERTAINMENT/TRAVEL/TRAINING IS NOT IN FACT RECEIVED OR (WHERE RELEVANT) IS RETURNED?

Liability for giving or offering a bribe under Australian law does not depend on whether or not the benefit was received or kept . Whether a benefit was received or kept may be relevant to whether an official or private person has breached Australian bribery offences that relate to receiving a bribe .

PART 3 – DISCLOSING/SEEKING APPROVAL FOR GIFTS/ENTERTAINMENT/TRAVEL/TRAINING

14. WOULD PROPER INTERNAL DISCLOSURE TO A SUPERIOR CONCERNING THE DETAILS OF THE GIFT/ENTERTAINMENT/TRAVEL/TRAINING TO BE OFFERED BE SUFFICIENT TO AVOID LIABILITY? IF SO WHAT FORM SHOULD THE DISCLOSURE TAKE?

Transparency regarding the provision of a benefit is a key consideration in assessing whether the circumstances may give rise to an offence . In respect of secret commission offences, transparency will almost universally cure a potential breach . If the potential provision of a benefit to an agent is disclosed to the agent's principal (normally their employer), it is not a "secret" commission . In respect of the public sector bribery offences, evidence that the provision of the benefit was open and transparent may help to establish that the offeror did not act with the requisite intention .

If a request for transparent disclosure is met with sensitivity by an official this ought be considered a ’warning signal’ .

Both public sector and private companies in Australia often have internal policies requiring employees to obtain senior internal approval for the provision or receipt of benefits above a certain value . In this way, employers are already obtaining transparency over the benefit, and should not be surprised or offended by a

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request from a potential offeror to confirm that the relevant approvals have been obtained .

15. IF THE (POTENTIAL) RECIPIENT REPORTS AND OBTAINS WRITTEN ACKNOWLEDGEMENT FROM HIS/HER COMPANY/PUBLIC BODY EMPLOYER THAT IT IS AWARE OF THE ADVANTAGE OFFERED TO ITS EMPLOYEE, WOULD THIS AVOID LIABILITY?

Written acknowledgement from the company or public body will assist in demonstrating that a benefit is not 'secret', curing any potential breach of secret commission laws . Similarly such written acknowledgement would be a strong factor tending against a suggestion that the benefit was being offered in a way that was “not legitimately due” or with the requisite intention . However, consideration needs to be given to the particular circumstances, and steps should be taken to ensure that acknowledgement is provided by a sufficiently senior person representing the company or public body, rather than another employee who may be said to be complicit in the conduct .

PART 4 – FINES/PENALTIES

16. WHAT SENTENCES/FINES MAY BE IMPOSED ON INDIVIDUALS AND COMPANIES FOR BREACH OF ANTI-BRIBERY LAWS?

Criminal proceedings

The penalties for bribery of a foreign or Commonwealth public official under sections 70 .2 and 141 of the Commonwealth Criminal Code are as follows:

individuals: imprisonment up to ten years and/or a fine up to 10,000 penalty units9 (AUD 1 .8 million as at July 2016) .

corporations: fine amounting to the greatest of:

100,000 penalty units (AUD 18 million as at July 2016);

three times the value of any benefit that the corporation has obtained that is reasonably attributable to the conduct constituting the offence, where the court can determine the value of that benefit; or

ten percent of the annual turnover of the corporation during the 12 months preceding the offence, where the court cannot determine the value of the benefit .

The penalties for giving or receiving a corrupting benefit to a Commonwealth official under section 142 of the Commonwealth Criminal Code are:

individuals: imprisonment of five years and/or fine up to 300 penalty units10 (AUD 54,000 as at July 2016) .

corporations: fine up to 1,500 penalty units11 (AUD 270,000 as at July 2016) .

In addition to penalties under the Commonwealth Criminal Code, the Commonwealth Director of Public Prosecutions may seek orders for the confiscation, forfeiture or disgorgement of the proceeds of crime under the Proceed of Crime Act .

The penalties for secret commission offences under state and territory legislation vary . For example, under the Crimes Act 1958 (Vic) and Sentencing Act 1991 (Vic), the relevant penalties are as follows:

Individuals:

imprisonment up to ten years; and/or

fine up to 1,200 penalty units12 (AUD 186,552 as at July 2016) .

Corporations: fine up to 1,200 penalty units (AUD 186,552 as at July 2016) .

Civil/administrative proceedings or sanctions

Under the Public Service Act 1999 (Cth), civil sanctions may be imposed on Commonwealth public service employees for breaches of the Australian Public Service Code of Conduct, which includes anti-corruption provisions . Sanctions include termination of employment, reduction in salary and reprimand . The appointments of certain officials may also be terminated pursuant to the Public Governance Performance and Accountability Act 2013 for conduct that amounts to a breach of certain duties, including the duty to act in good faith and for a proper purpose, and the duty not to make improper use of his/her position .

Similar sanctions apply to state and territory public service employees who engage in such misconduct .

In the case of a company or director convicted of bribery, the Australian Securities and Investments Commission may also consider whether there has been a breach of any directors' duties under the Corporations Act, which may attract:

pecuniary orders, up to AUD 200,000;

compensation orders; or

disqualification from managing a corporation .

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ENDNOTES1 . Australian Public Service Code of Conduct 5 .4 .3 .

2 . Australian Public Service Code of Conduct 5 .4 .5 .

3 . Attorney-General’s Department Foreign Bribery Online Module ‘What is Reasonable Hospitality?’



6 . Attorney-General’s Department Foreign Bribery Online Module ‘Forms of Bribery’ .

7 . Criminal Code Act 1995, 70 .2 .

8 . Australian Public Service Values and Code of Conduct in Practice, Australian Government, Australian Public Service Commission February 2016, 5 .5 .1 .

9 . Crimes Act 1914 (Cth) s4A . A penalty unit means the amount of AUD 180 and will be indexed on 1 July 2018 .

10 . Section 4B(2) Crimes Act 1914 (Cth) . Where a natural person is convicted of an offence against a law of the Commonwealth punishable by imprisonment only the court can impose a fine calculated by multiplying the term of imprisonment (in months) by five .

11 . Section 4B(3) Crimes Act 1914 (Cth) .

12 . Sentencing Act 1991 Endnotes .

Grant MarjoribanksPartner, Herbert Smith FreehillsT +61 2 9225 5517grant .marjoribanks@hsf .com

Paul WenkPartner, Herbert Smith FreehillsT +61 3 9288 1704paul .wenk@hsf .com

Jacqueline WoottonPartner, Herbert Smith FreehillsT +61 3 9288 1022jacqueline .wootton@hsf .com

We have offices in Melbourne, Sydney, Brisbane and Perth . Our expertise spans practice areas including: capital markets; competition; compliance and regulatory; construction; corporate; corporate governance and head office advisory; dispute resolution; employment, pensions and incentives; energy; environment and planning; finance; insurance; intellectual property; investigations; investment funds; mergers and acquisitions; mining; private equity; projects and infrastructure; real estate; restructuring, turnaround and insolvency; and tax .

We advise clients on anti-bribery and corruption issues in the context of transactional work; compliance programmes; strategies to minimise reputational, criminal and civil risks; internal investigations and regulatory investigations . We have a deep understanding of the legal issues, as well as experience dealing with law enforcement agencies and regulators in a range of jurisdictions . We are also able to draw upon the skills and expertise of lawyers across our global network .

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CHECKLIST1

PRINCIPAL BRIBERY OFFENCES RELEVANT TO GIFTS/ENTERTAINMENT/TRAVEL/TRAINING

Public sector offences Bribery of foreign public officials (section 70 .2 Commonwealth Criminal Code)

A provides, offers or promises to provide a benefit to B which is "not legitimately due" (or causes such a benefit to be offered, promised or provided) and

A does so with the intention of influencing a foreign public official, who may or may not be B, in the exercise of the official's duties, in order to obtain or retain business, or obtain or retain a business advantage that is “not legitimately due”

Bribery of Commonwealth public officials (section 141 .1 Commonwealth Criminal Code)

A dishonestly provides, offers or promise to provide a benefit to B (or causes such a benefit to be offered, promised or provided)

A does so with the intention of influencing a public official, who may or may not be B, in the exercise of the official's duties as a public official and

the public official is a Commonwealth public official, and the relevant duties sought to be influenced are those of a Commonwealth public official

Section 141 .1 also prohibits a Commonwealth public official from dishonestly accepting a benefit with the intention that his/her official duties will be influenced, or inducing belief that he/she will be influenced

Section 142 .1 prohibits the dishonest offer, provision or acceptance of corrupting benefits to or by Commonwealth public officials

Private sector offences Most state/territory legislation prohibits secret commission offences which prohibit:

agents from corruptly accepting or soliciting a benefit as an inducement or reward for an act or omission in relation to the principal's business and

persons from corruptly giving a benefit to an agent with the intention of influencing the principal's business

Do these offences relate to benefits offered to those in the private sector as well as those in the public sector?

Yes, most state/territory legislation prohibits secret commission offences

Can bribery through an intermediary constitute an offence?

Yes, if all elements of the offence exist there can be bribery through an intermediary or agent

Are acts of corporates as well as individuals caught?

Yes

Do these bribery laws have extra-territorial effect?

Yes

Is bribery of foreign public officials prohibited?

Yes

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PRINCIPAL BRIBERY OFFENCES RELEVANT TO GIFTS/ENTERTAINMENT/TRAVEL/TRAINING

Sentences/fines imposed on individuals and companies for breach

Penalties for bribing foreign or Commonwealth public officials under sections 70 and 141 of the Commonwealth Criminal Code are:

Individuals

imprisonment up to 10 years and/or a fine up to 10,000 penalty units (AUD 1 .8 million as at July 2016)

Corporations

Fine amounting to the greatest of:

100,000 penalty units (AUD 18 million as at July 2016)

3 times the value of any benefit or

10% of annual turnover of corporation during 12 month period preceding the offence

Penalties for breaches of state and territory secret commission laws vary

PROVISION OF GIFTS, ENTERTAINMENT, TRAVEL AND TRAINING

What gifts may be acceptable? Gifts that do not give rise to an actual or perceived conflict of interest, such as gifts that are offered to the community, or the public service as a whole

It will also usually be appropriate for an official to accept a gift on behalf of his/her government agency, rather than in the official’s personal capacity

What gifts may be unacceptable?

Any gift that gives rise to an actual or perceived conflict of interest, such as:

gifts that are from a person or company that is involved in a tender process with the official’s agency

gifts that are from a person or company that is otherwise subject to a decision at the discretion of, or in the sphere of influence of, the official

What entertainment/hospitality may be acceptable?

Entertainment/hospitality that is

provided to further the recipient’s familiarity with the offeror’s business or products

provided by a company that has a clear policy on the provision of gifts and hospitality, and complies with that policy

correctly recorded by the company

modest and proportionate and

could not reasonably be suspected of having influence over the recipient’s decision-making process

What entertainment/hospitality may be unacceptable?

Any entertainment/hospitality that gives rise to an actual or perceived conflict of interest

What travel/accommodation may be acceptable?

Travel and accommodation that does not give rise to an actual or perceived conflict of interest

What travel/accommodation may be unacceptable?

Any travel and accommodation that gives rise to an actual or perceived conflict of interest; more likely to occur if the travel/accommodation is lavish

The Australian Public Service Code of Conduct advises officials that it will generally not be appropriate to accept offers of paid travel or accommodation associated with attendance at events

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PROVISION OF GIFTS, ENTERTAINMENT, TRAVEL AND TRAINING

Could education/training be considered a bribe?

Education or training could be considered a bribe if it is provided with the intention of influencing a public official and the benefit is not “legitimately due”

Education or training that is considered lavish in the circumstances will be more likely to draw an inference that it was intended to influence a public official

As a general rule, conferences, seminars and training programmes will be acceptable provided that:

attendance would help the agency achieve its aims or objectives

no actual or perceived conflict of interest arises and

no perception of supplier preferential treatment arises

What if the gift/entertainment/travel/training is given to a spouse/relative of an individual/public servant?

A benefit does not need to be provided directly to a public official or private person in order to give rise to a potential offence

Benefits to a spouse or relative with the requisite intention to influence an official or private person can constitute an offence

What if the gift/entertainment/travel/training involves a donation to charity?

This situation is fact dependant . If the donation is made with the intention of influencing a public official, it may be considered a bribe

What if the gift/entertainment/travel/training is not received or, where applicable, is returned?

Liability for giving or offering a bribe is not dependent on whether or not the bribe was received or kept

DISCLOSURE OF GIFTS, ENTERTAINMENT, TRAVEL AND TRAINING

Impact of internal disclosure by offeror to his/her employer of gift/entertainment/travel/training to be offered

Transparency regarding the provision of a benefit is a key consideration in assessing whether the circumstances may give rise to an offence

In respect of secret commission offences, transparency will almost universally cure a potential breach

Impact of (potential) recipient reporting /seeking written acknowledgement from his/her employer of the gift/entertainment/travel/training offered

Obtaining written acknowledgement from the company/public body will:

assist in demonstrating that a benefit is not “secret”, curing any potential breach of secret commission laws and

be a strong factor tending against a suggestion that the benefit was being offered in a way that was “not legitimately due” or with the requisite intention

Consideration should always be given of the particular circumstances, and steps should be taken to ensure that acknowledgement is provided by a sufficiently senior person representing the company or public body, rather than another employee who may be said to be complicit in the conduct

Australian public officials may also be required to obtain approval in accordance with the policy or code of conduct relevant to their role before accepting such offers

ENDNOTE1 . This is a checklist only summarising key points . Please consult the chapter and/or contact Herbert Smith Freehills for more information .

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KEY CONTACTS

Kyle Wombolt Partner, global head -corporate crime and investigationsT +852 2101 4005kyle .wombolt@hsf .com

GREATER CHINAHong Kong

Robert HuntPartnerT +852 2101 4128robert .hunt@hsf .com

Julian CopemanGreater China managing partnerT +852 2101 4245julian .copeman@hsf .com

Gareth ThomasPartnerT +852 2101 4025gareth .thomas@hsf .com

James DaltonSenior ConsultantT +852 2101 4178james .dalton@hsf .com

BeijingJessica FeiPartner T +86 10 6535 5080 jessica .fei@hsf .com

ShanghaiHelen TangSenior AssociateT +86 21 2322 2160helen .tang@hsf .com

SOUTH EAST ASIABangkok

Gavin MargetsonPartner, head of disputes, ThailandT +66 2 657 3817gavin .margetson@hsf .com

Chinnawat ThongpakdeeManaging partner, BangkokT +66 2 657 3829chinnawat .thongpakdee@hsf .com

JakartaDavid Dawborn Senior International Counsel, Hiswara Bunjamin & Tandjung (HBT) (in association with Herbert Smith Freehills)T +62 21 574 4010 david .dawborn@hbtlaw .com

Antony CrockettInternational Counsel, Hiswara Bunjamin & Tandjung (HBT) (in association with Herbert Smith Freehills)T +62 21 5790 0576antony .crockett@hbtlaw .com

SingaporePamela KiesselbachSenior ConsultantT +65 6868 9826pamela .kiesselbach@hsf .com

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Alastair HendersonManaging partner, South East AsiaT +65 6868 8058alastair .henderson@hsf .com

NORTH ASIATokyo

David GilmorePartner, head of disputes, TokyoT +81 3 5412 5415david .gilmore@hsf .com

Peter GodwinHead of Asia disputes, Japan managing partnerT +81 3 5412 5444peter .godwin@hsf .com

Elaine WongPartner T +81 3 5412 5492elaine .wong@hsf .com

SeoulMike McClurePartner T +82 2 6321 5701 mike .mcclure@hsf .com

AUSTRALIAMelbourne

Jacqueline WoottonPartnerT +61 3 9288 1022jacqueline .wootton@hsf .com

Paul WenkPartnerT +61 3 9288 1704paul .wenk@hsf .com

SydneyGrant MarjoribanksPartnerT +61 2 9225 5517grant .marjoribanks@hsf .com

Anna SutherlandPartner, head of disputes, SydneyT +61 2 9225 5280anna .sutherland@hsf .com

Leon ChungPartnerT +61 2 9225 5716leon .chung@hsf .com

Andrew EastwoodPartnerT +61 2 9225 5442andrew .eastwood@hsf .com

PerthElizabeth MacknayPartnerT +61 8 9211 7806elizabeth .macknay@hsf .com

BrisbaneElizabeth PoulosPartnerT +61 7 3258 6575elizabeth .poulos@hsf .com

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EUROPELondon

Susannah CogmanPartnerT +44 20 7466 2580susannah .cogman@hsf .com

Rod FletcherPartnerT +44 20 7466 2411rod .fletcher@hsf .com

Daniel HudsonPartner T +44 20 7466 2470daniel .hudson@hsf .com

Andrew ProcterPartner T +44 20 7466 7560andrew .procter@hsf .com

Kate MeakinOf CounselT +44 20 7466 2169kate .meakin@hsf .com

FrankurtDr Dirk SeilerPartnerT +49 69 2222 82535 dirk .seiler@hsf .com

Dr Helmut GoerlingPartnerT +49 69 2222 82511 helmut .goerling@hsf .com

Dr Mathias WittinghoferPartnerT +49 69 2222 82521mathias .wittinghofer@hsf .com

MadridEduardo Soler Tappa PartnerT +34 91 423 4061 eduardo .solertappa@hsf .com

MoscowVladimir Melnikov PartnerT +7 495 36 36506vladimir .melnikov@hsf .com

Alexei PanichPartnerT +7 495 363 65 15alexei .panich@hsf .com

ParisJonathan MattoutPartnerT +33 1 53 57 65 41jonathan .mattout@hsf .com

MIDDLE EASTUnited Arab Emirates

Stuart PatersonPartnerT +971 4 428 6308stuart .paterson@hsf .com

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USNew York

Scott BalberPartner, US head of investigations and financial services litigationT +1 917 542 7810scott .balber@hsf .com

John O'DonnellPartnerT +1 917 542 7809john .odonnell@hsf .com

Jonathan CrossCounsel T +1 917 542 7824jonathan .cross@hsf .com

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Kyle is the global head of Herbert Smith Freehills' corporate crime and investigations practice . Based in Hong Kong, he has 16 years experience in Asia and has led investigations and compliance projects in more than 40 countries worldwide . He focuses on multi-jurisdictional anti-corruption, regulatory, fraud and accounting investigations, as well as trade and sanctions issues involving multinational and major regional corporates . He has extensive experience in dealing with government agencies and regulators in Asia, Europe, Australia and the US . Kyle also advises and lectures on anti-money laundering and cyber security .

Kyle advises on implementing anti-corruption compliance programmes for a broad range of clients, including investment banks and other financial institutions and multinational companies . He regularly advises clients on corruption risks associated with a wide range of transactions, including IPOs, mergers and acquisitions and joint venture relationships .

Kyle is admitted in Hong Kong, California and New York and is a registered foreign lawyer in England and Wales . He speaks English and is conversational in Mandarin .

Kyle WomboltPartner and Global Head of Corporate Crime and Investigations, Hong KongT +852 2101 4005kyle .wombolt@hsf .com

AUTHORS

Anita is a professional support consultant . She trained with the firm and has worked in our London, Paris and Hong Kong offices . She has broad experience in all forms of contentious work, including regulatory investigations and other corruption-related matters, arbitration, litigation and mediation .

Anita specialises in thought leadership initiatives . She has led on a number of global research projects, including the firm's ADR initiatives and ADR blog, written the leading guide to dispute resolution in Africa's 54 jurisdictions, and edited the 4th edition of Sweet & Maxwell's Kendall on Expert Determination . Anita is currently leading the firm's work on the Global Pound Conference series in Asia . This involves 40 conferences in 30 countries worldwide to assess corporates' use of litigation, arbitration and ADR to resolve disputes .

Anita supports the corporate crime and investigations practice from Hong Kong . Recent work in this area includes the 2015 edition of the Guide to Anti-corruption Regulation in Asia Pacific, the 2015 Global Anti-corruption Report and the 2016 Guide to Anti-bribery Regulation in Asia Pacific .

Anita PhillipsProfessional Support Consultant, Hong KongT +852 2101 4184anita .phillips@hsf .com

Pamela KiesselbachSenior Consultant, SingaporeT +65 6868 9826pamela .kiesselbach@hsf .com

Pamela is a dual-qualified German and English disputes lawyer with over 20 years experience in assisting multinational and regional clients in large-scale cross-border disputes and investigations as well as risk and compliance programmes .

Pamela has broad sector experience, scanning international and regional investment banks and other financial services providers, national energy companies and private majors as well as clients in the technology and telecommunications sectors .

Pamela relocated to Hong Kong in 2012 . Since that time she has led teams on some of the largest, and most complex, cross-border internal investigations currently underway anywhere in the world . She has also advised clients on their compliance programmes and has delivered compliance training across numerous jurisdictions in Hong Kong and South Asia . Pamela also advises on cyber security issues . She moved to Singapore in 2014, where she leads the South East Asia Corporate Crime and Investigations team and liaises closely with the firm's other offices in the region .

© Herbert Smith Freehills 2016 APB146254_Z_v6 210716

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Documents

GIFTS, ENTERTAINMENT, TRAVEL AND TRAINING...To be found in breach, it is not necessary to prove that business, or a business advantage, was actually obtained or retained . Subsections