Foreign bribery risk is not a “cost of doing business”

Australian companies operating in higher‑risk economies such as Indonesia, India, Papua New Guinea and parts of Africa have long faced a dilemma: how to compete for government contracts in environments where informal payments, agents and political connections are perceived as the norm. For many years, foreign bribery risk has been treated as either unavoidable, or worse, a commercial reality that can be managed quietly.

Over the past five years, the convergence of tougher Australian laws, increased international cooperation and renewed enforcement activity, however, has fundamentally elevated the risk profile for Boards and senior executives. Foreign bribery poses a very real, strategic risk with direct implications for criminal liability, market access and corporate reputation.

Failure to prevent foreign bribery

Australia’s foreign bribery offence has existed in the Criminal Code since 1999. Enforcement, however, has been historically limited. The enactment of the Crimes Legislation Amendment (Combatting Foreign Bribery) Act 2024, which came into force in September 2024, represented a material shift for Boards.

The reform introduced a “failure to prevent foreign bribery” offence, modelled closely on the UK Bribery Act. Where an employee, agent, contractor or subsidiary bribes a foreign public official for the company’s benefit, the Australian company or organisation can now be held criminally liable. This applies even if the Board or senior management had no knowledge of the conduct; the only defence is demonstrating that the company had adequate procedures to prevent bribery in the first place.

Foreign bribery risk is not a peripheral compliance issue and can no longer be confined to rogue employees or distant subsidiaries. It must be treated as a Board-level governance issue that goes directly to oversight, risk appetite and assurance.

Multi-jurisdictional laws multiply exposure

Australian companies must also contend with multi-jurisdictional enforcement under the US Foreign Corrupt Practices Act (FCPA) and the UK Bribery Act. These regimes regularly apply to Australian businesses through US listings, UK operations, joint ventures, financing arrangements or the use of overseas agents and intermediaries.

In 2023, Rio Tinto paid US$15 million to settle US SEC proceedings arising from a bribery scheme involving a consultant in Guinea, with regulators finding failures in internal controls and books and records. The investigation represented an FCPA enforcement action, not only an Australian one, with Australian enforcement agencies providing express cooperation.[1][2]

The takeaway for Boards is that even where Australian prosecutions fail or do not ultimately proceed, international regulators may step in with far more aggressive penalties.

Enforcement activity raises the risk from “Low” to “Live”

Recent enforcement activity shows that Australian companies are firmly on notice.

In 2023, Oz Minerals agreed to more than $9 million in confiscation orders following a self‑reported investigation into alleged bribery of Cambodian officials by a subsidiary to secure mining rights. While there was no criminal prosecution, the financial, reputational and governance cost to the company was significant.[3]

The Leighton Holdings (now CIMIC Group) / Unaoil scandal serves as a stark reminder of how foreign bribery investigations can unfold across multiple jurisdictions. Senior executives were charged in Australia over alleged bribery linked to contracts in Iraq and Africa, with US and UK authorities also involved throughout the investigation.[4]

More recently, Australian authorities have been investigating allegations involving PNG‑based government contracts, including suspected bribery of senior officials in connection with Australian contractors operating offshore. The continued scrutiny has already damaged the reputations of organisations involved and prompted strict governance reviews.[5]

There are similarities across each of these examples: reliance on third‑party intermediaries, weak oversight of foreign subsidiaries, and Boards that struggled to see emerging risks until investigators were already involved.

What Boards should be asking

Regulators are increasingly focused on what Boards knew, challenged and monitored. This means that foreign bribery risk poses legal questions as well as questions about an organisation’s control environment and culture.

The Australian Institute of Company Directors has been explicit that Boards must actively test and challenge management on foreign bribery prevention, particularly in high‑risk jurisdictions where government contracting is core to the business model. [6]

Directors are encouraged to ask:

Do we genuinely understand where our highest corruption risks sit — country by country, deal by deal?

How well do we know our agents, partners and consultants in high‑risk markets?

Can management demonstrate that anti‑bribery controls are operating effectively, not just existing on paper?

Would we be able to defend our procedures as “adequate” under Australian law if these were tested tomorrow?

Plausible deniability is not a defence

Foreign bribery risk is a strategic and reputational risk that can derail growth plans, exclude companies from global markets, and expose Directors to intense scrutiny and criminal liability. For Australian businesses operating in Indonesia, India, PNG and African markets in particular, the question has moved from “Could this happen?” to “Are we ready if it does?”

In the current enforcement environment, distance and plausible deniability will not qualify as defences. Only demonstrable leadership, investment in prevention, and credible governance oversight will protect Australian Boards and executives when foreign bribery risk crystallises.

[1] Rio Tinto Mining Company Pays $15 Million to Settle US Bribery Accusations | OCCRP

[2] Securities and Exchange Commission charges mining company Rio Tinto plc with failure of bribery controls and Rio to pay $15 million to settle | Jeff Newman Law

[3] An Australian mining company investigated by the AFP over alleged foreign bribery has agreed to confiscation orders to the value of at least $9.3 million | Australian Federal Police

[4] Brisbane man arrested, two international warrants issued in foreign bribery investigation | Australian Federal Police

[5] Australian Police probe PNG minister in $3 million detention bribe investigation | PINA

[6] Detecting and preventing foreign bribery and corruption