• A recent High Court decision has confirmed that a sentencing court must set the maximum available penalty for corporate bribery offending under s 70.2(5) of the Criminal Code with reference to the ‘gross’ value of the benefit obtained from the offending.
  • The case is another example of how superior courts are taking corporate offending increasingly seriously. The courts will impose penalties at a level that means businesses and their executives should understand them as more than just the acceptable price to be paid for business practices in breach of the law.
  • The decision has ramifications beyond bribery offending and the Criminal Code, as there are other very similar criminal and civil penalty provisions. Courts may follow the High Court’s reasoning in this decision when setting penalties in these different statutory contexts.

What is the ‘value of the benefit’ of corporate criminal offending? Should it be the gross benefit received by the offending corporation?  Or should it be that sum with deductions for the offender’s costs?  These are the questions recently answered by the High Court in The King v Jacobs Group (Australia) Pty Ltd formerly known as Sinclair Knight Merz [2023] HCA 23 (‘Jacob’s Group’).

The appeal considered the correct approach to setting the maximum available penalty for Sinclair Knight Merz’s (‘SKM’) offending in conspiring to bribe foreign officials. In short, the High Court held that under s 70.2(5) of the Criminal Code, the maximum available penalty must be set with reference to the ‘gross’ value of the benefit obtained from the offending, as opposed to the ‘net’ value.

Corporate offenders can now expect to pay higher penalties as sentences are more likely to be ordered with reference to a higher maximum. However, the decision’s impact is not confined to bribery. Similar language is found in the criminal and civil penalty provisions of other Commonwealth legislation regulating corporate conduct including the Australian Securities and Investments Commission Act 2001, the Competition and Consumer Act 2010 and the Corporations Act 2001 (‘Corporations Act’). The High Court’s ruling may therefore have relevance to a range of civil and criminal offence provisions, including misleading or deceptive conduct, insider trading, market manipulation and cartel conduct.

Bribery and the maximum available penalty

SKM pleaded guilty to three counts of conspiracy as a body corporate to bribe foreign officials under ss 11.5 and 70.2(1) of the Criminal Code. SKM is an engineering, project delivery and consulting company. It admitted that bribes had been made over a number of years in the Philippines and Vietnam for projects funded by the World Bank or the Asian Development Bank. The third count was for securing contracts for the carrying out of three construction projects.

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