High Court’s hard line in bribery case could lift corporate penalties

afr.com:

The High Court has opened the door to tougher penalties for corporate offending after rejecting a fine of $1.35 million for engineering firm Sinclair Knight Merz (SKM) in a foreign bribery case.

The court on Wednesday said the “benefit” that SKM received from projects in Vietnam and the Philippines had been drastically understated at $2.8 million, and was actually $10.1 million.

The court said SKM should not have been allowed to deduct its costs and that the benefit – a key yardstick in sentencing – was the full value of the work.

The High Court said the penalty had to be “effective, proportionate, and dissuasive”. Alex Ellinghausen

Lawyers said this could have a flow-on effect to offences including cartel conduct and insider trading and led to tougher penalties.

SKM, which became part of the Jacobs Group in 2013, pleaded guilty to making corrupt payments to secure work on aid projects funded by the World Bank and Asian Development Bank between 2003 and 2012.

Five SKMexecutives faced criminal charges, but all were either found not guilty or had their trials discontinued.

The maximum penalty for foreign bribery under the Commonwealth Criminal Code is 100,000 penalty units, or three times the value of the direct or indirect benefit, or – if the benefit cannot be calculated – 10 per cent of the company’s annual turnover. At the time of the offending a penalty unity was worth $110; it is now $313.

NSW Supreme Court Justice Christine Adamson fined SKM $1,471,500 – which included a benefit penalty of $1.35 million –  an amount that was reduced because of the delay in bringing the case.

She accepted SKM’s submission that its benefit was $2,680,816, not the gross amount received of $10,130,354.

However, the High Court said “no