Paul Scarr (Queensland, Liberal Party) Share this | Hansard source

I acknowledge the comments Senator Shoebridge made in his thoughtful contribution—and it was thoughtful—in relation to deferred prosecution agreements. I say through you, Chair, that I think there are plenty of tried and tested precedents—and I'll touch on this—around the world which could inform a deferred prosecution agreement regime in Australia.

My deep concern is that this will be the only opportunity we have over, say, the next five years to actually deal with this in legislation. My deep concern is that we're losing an opportunity. This is a missed opportunity. Senator Shoebridge will know—all the senators in this place will know—how difficult it is to find time on the legislative calendar, and this legislation is an example of that. It's been mooted for seven or eight years. It's taken that long to get here. In that time we're going to lose opportunities to participate with like-minded countries all over the world as part of deferred prosecution agreements which are being entered into on an international basis. That's my concern and that is why I am profoundly disappointed, to be frank, that we're missing this opportunity, because I just don't see the logic in it. Senator Shoebridge referred to those who have some sort of misguided in-principle objection to deferred prosecution agreements. I really don't know what the thinking is amongst those on the government side of the chamber as to why they're so resistant to a system that has worked quite effectively over a number of years, and I'll touch upon that.

By way of background, in my previous life I was company secretary and general counsel of a company that had operations in some jurisdictions which were ranked by Transparency International as some of the jurisdictions or countries most prone to corruption. Corruption of this nature is a disease. It is a dry rot that infects civic society wherever it is practised. I cannot emphasise enough the disruption, the undermining of civic society in those countries that have issues with foreign bribery and corruption. It undermines the faith of the population in the institutions and their leadership, and it is a disease, a dry rot in civic society where it's practised. And I think we, as a member of the OECD, have an obligation to do all we can to stamp out the practice. So, it is something that's dear to my heart, and that is why I feel the gravity that we really are losing an opportunity here, and that genuinely grieves me.

I want to refer to three cases, and this is perhaps the best way to draw out how we're losing an opportunity here. The first case was in 2017. It was a deferred prosecution agreement entered into in 2017. That's seven years ago. Indeed, the investigations leading to this deferred prosecution agreement started in 2013. Rolls-Royce entered into a deferred prosecution agreement with the governments of the United States, Brazil and the United Kingdom, with a total value of 671 million pounds. It was in relation to conduct that Rolls-Royce had engaged in with the governments of Indonesia, Thailand, India, China and Malaysia—all countries in the region, and Rolls-Royce carries on business here in our own country. Yet that deferred prosecution agreement in relation to corruption in our own region could be entered into only by the USA, Brazil and the UK. Australia should be on that list. By not having a deferred prosecution agreement regime, we were deprived from participating in the discussions that led to that 671-million-pound fine.

With respect to that case, I want to read an extract from what the judge, one of the highest judges in the UK, said when considering the deferred prosecution agreement. The way the system works in the UK, and I think it works very well—and I'm sure those on this side of the chamber would be happy to enter into discussions about the best system, but gee, we need a system—is that it goes to court and a judge considers the proposed deferred prosecution agreement. I want to quote from the judgement of that judge, Sir Brian Leveson:

… the investigation into the conduct of individuals continues and nothing in this agreement in any way affects the prospects of criminal prosecutions being initiated if the full code test for prosecution is met.

So, this deferred prosecution agreement that was entered into with the corporate Rolls-Royce did not prevent criminal proceedings proceeding against the individual managers who were involved.

He goes on:

So the question becomes whether it is necessary to inflict the undeniably adverse consequences on Rolls-Royce that would flow from prosecution because of the gravity of its offending even though it may now be considered a dramatically changed organisation. In any event, it will have to suffer the undeniably adverse publicity that will flow from the facts of its business practices which will be exposed by the DPA so that the way in which it has done business will be obvious. Any public procurement exercise will be conducted in the light of its history and it will doubtless only win contracts on the merits of its products. That, of course, is as it should be. Neither will the conduct of Rolls-Royce escape sanction: it could only ever be fined and the DPA has to be approached on the basis that it must be broadly comparable to the fine that a court would have imposed on conviction following a guilty plea.

So you can see the thought that the judge put into the case in terms of the competing interests and the balancing of consideration. That is a process which is robust and has integrity and independent oversight, and it led to this result. As a result of those agreements, US$170 million was paid to the US government and the taxpayers of the US, $25 million was paid to the government of Brazil and the balance went to the United Kingdom. Australia should have had the opportunity to be a party to that. Because we don't have the scheme, we were denied that opportunity.

The second case I want to refer to is that of Airbus, which Senator Cash referred to, in 2020. We didn't have a deferred prosecution agreement regime in 2017, when the Rolls-Royce case occurred. Legislative action wasn't taken up to 2020, and then we got the Airbus case. Airbus was sentenced to pay $3.6 billion under a deferred prosecution agreement. Where did that money go? Who was a party to those agreements? The USA, the United Kingdom and France. What was the region in which that corrupt conduct occurred? Again, it was in our region—Taiwan, Indonesia, Malaysia and Sri Lanka. And Airbus does business here. Because we don't have a deferred prosecution agreement regime, again, none of that $3.6 billion was paid to our authorities to enable them to conduct further investigations and pursue further prosecutions. It all went to other countries that have deferred prosecution agreements. We weren't at the table. We were denied the opportunity to be at the table to discuss and to be part of the bargaining of that deferred prosecution agreement.

That was in 2020, and now here we are in 2024, and we still don't have it. We've got an opportunity—a bill before the house where we could introduce a deferred prosecution agreement regime—and it sounds like we're not going to have one. Another four years have passed. When is the next big global case going to occur where again Australia is deprived of the opportunity of being at the table to negotiate with the corporate wrongdoer? When is that opportunity going to arise?

Now I want to give the third example, and perhaps this will underline how silly this all is. This example hasn't been referred to. This is an Australian example, OZ Minerals—or, I should say, one of its predecessors, Oxiana. It has had to meet confiscation orders to the value of at least $9.3 million. This was announced in Australia recently. It had to pay a pecuniary penalty of $3.65 million. This was 30 May 2023. It had to forfeit $5.71 million received by the company and all future right and entitlement to all ongoing payments to the company under a sale agreement with respect to mineral tenements in Cambodia—one of those high-risk countries. This was announced in May 2023. Senator Shoebridge referred to extraction companies, and in effect this was an extraction company that had to pay a pecuniary penalty in relation to its conduct in Cambodia and had to forfeit proceeds in May 2023.

This was entered into without us having a deferred prosecution agreement regime. This was cobbled together under other pieces of legislation which are not in the nature of formal deferred prosecution agreements. With respect to this, there was a reference to the Australian Federal Police and Commonwealth Director of Public Prosecutions Best Practice Guidelines. This agreement was entered into in May 2023 under cobbled-together guidelines—not a legislative scheme that we in the parliament have actually considered and passed but guidelines. Let me read you one of the horrifying things about these AFP and CDPP Best Practice Guidelines. They say:

AFP and the CDPP will review the operation of this Guideline—

it's not legislation or regulation. It hasn't come before this parliament. It says:

AFP and the CDPP will review the operation of this Guideline within two years or earlier in the event that a Deferred Prosecution Agreement Scheme commences.

These guidelines are from 2017, and I haven't seen any update. Fast-forward to 2023. These guidelines are used as the basis for something that sort of looks like a deferred prosecution agreement but has not been done under a deferred prosecution agreement regime. So this is the worst of all worlds. We're losing the opportunity of participating in cross-border resolution of corruption penalties with major multinational companies, because we don't have a deferred prosecution agreement regime. That $3.6 billion fine that Airbus was hit with went to taxpayers in the UK, the US and France, and that was with respect to corruption activity in our own region. So we lost that opportunity. We're using cobbled-together guidelines that were meant to be reviewed within two years of 2017—and I think they're still in place—to come up with something that sort of is trying to do what a deferred prosecution agreement does, without it being on basis of a regime approved by this parliament. That's the worst of all worlds.

I genuinely do not understand the reticence amongst government members. Maybe some of the government members can inform you off the record. I won't refer to it. I do not understand what they discussed in their party room when they came up with this position. It really baffles me. You've got stakeholders like Transparency International, and I want to read what they said. This is a great conclusion, I think. Transparency International is an outstanding organisation. This is what they say:

We note the proposed Bill does not include a Deferred Prosecution Agreement (DPA) scheme. This reduces the incentives for companies to self-report examples of foreign bribery involving their operations and will continue to undermine Australia's foreign bribery laws. DPAs are used in jurisdictions including Canada, France, the UK, the US and Singapore.

…   …   …

Unless the use of settlements for foreign bribery can be seen to be delivering real deterrence and effective sanctions, public confidence across the world in the fight against corruption will be undermined. The experience of the US and UK is that a DPA scheme increases detection and results in more prosecutions of foreign bribery and other criminal offences.

I would have thought that is something we should be trying to achieve in this place.