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Providing strategic advice on expansion structures November 16, 2018

Founded in Bondi Beach in 2012, Bailey Nelson has rapidly grown into a global eyewear retailer and service provider with boutiques in Australia, London, Canada and New Zealand. The strong demand for their products and … Continued

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Maddocks appoints leading energy and resources partner November 19, 2019

Tuesday 19 November 2019 Maddocks has appointed one of Australia’s leading energy and resources lawyers. Peter Limbers will be joining Maddocks as a partner in Sydney in early 2020. Peter is widely recognised as one … Continued

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Is your franchise network now liable to pay payroll tax? December 6, 2019

If, as part of your franchise network, you are a franchisor that performs the administrative function of collecting fees directly from customers that are mutual to you and your franchisees and you remit the balance … Continued

Under the Influence

Foreign influence remains a key issue for the Australian Government in 2019, following the release of ASIO’s 2018 report on national security and the introduction of the Foreign Influence Transparency Scheme Act 2018 (Cth) (the Act) late last year.

While the scheme is still controversial, the Federal Government has emphasised its focus on monitoring acceptable forms of influence over, as opposed to interference with, governmental and political processes.

Foreign Influence Transparency Scheme (FITS)

Established under the Act, FITS is a formal mechanism for regulating foreign influence over Australian Governmental and political processes. The objective of FITS is to provide transparency to the public and decision makers about the nature and extent of foreign activity in order to protect the integrity of our democratic institutes, systems and processes. It does not seek to restrict, deter or prohibit foreign actors from promoting their interests in Australia.

In practice, FITS requires any ‘person’ (individual or entity) who undertakes certain activities on behalf of a ‘foreign principal’ (foreign government, foreign government related entity/individual or foreign political organisation) to register under the scheme. Various reporting and disclosure obligations are then imposed on registrants to ensure ongoing compliance with FITS and transparency as to the nature of their relationship with a foreign principal.

While the Attorney-General’s Department has encouraged a number of Australian entities to evaluate their relationship with foreign bodies (including major banks, Channel Nine and Universities hosting China-funded Confucius Institutes), there are currently only 14 individuals and 34 entities recorded on the public register (as at 14 October 2019).

FITS will only be enlivened where the following requirements are met:

  • a person acts on behalf of a foreign principal
  • the activity is undertaken for the purpose of political or governmental influence
  • the activity falls within a ‘registrable’ category
  • no exemption applies.

In response to concerns about the vague drafting and potential overreach of FITS, the Federal Government sought to clarify the scope of several key provisions of the Act in April this year. Currently, activities requiring registration include lobbying (parliamentary and general political), communications activity (the distribution of information and material), disbursement activity, and any action taken by a former cabinet member or recent designated position holder on behalf of a foreign principal.

While penalties are yet to be imposed for non-compliance, a person risks up to 3 years imprisonment for providing false and misleading information to the Secretary and up to 5 years imprisonment for failing to register under FITS.

Key takeaway

Education sector bodies are encouraged to become familiar with FITS and consider whether any of their activities might be caught by the scheme. Universities in particular should be alive to the Federal Government’s focus on those institutes that host and/or receive funding from foreign bodies.

If you would like to discuss FITS and its potential application in further detail, please contact a member of our Education sector team.

Further reading

FITS Overview

https://www.ag.gov.au/Transparency

Factsheet 2 – What is the difference between ‘foreign influence’ and ‘foreign interference?’ released by the Attorney-General’s Department of the Australian Government in February 2019 < https://www.ag.gov.au/Integrity/foreign-influence-transparency-scheme/Pages/Resources.aspx>.

Author:

Louisa Nuccitelli | Senior Associate
+61 3 9258 3591
Louisa.Nuccitelli@maddocks.com.au

Michael Nicolazzo | Senior Associate
+61 3 9258 3306
Michael.Nicolazzo@maddocks.com.au

Isabella Stephens | Graduate Lawyer
+61 3 9258 3553
Isabella.Stephens@maddocks.com.au

Foreign influence remains a key issue for the Australian Government in 2019, following the release of ASIO’s 2018 report on national security and the introduction of the Foreign Influence Transparency Scheme Act 2018 (Cth) (the Act) late last year.

While the scheme is still controversial, the Federal Government has emphasised its focus on monitoring acceptable forms of influence over, as opposed to interference with, governmental and political processes.

Foreign Influence Transparency Scheme (FITS)

Established under the Act, FITS is a formal mechanism for regulating foreign influence over Australian Governmental and political processes. The objective of FITS is to provide transparency to the public and decision makers about the nature and extent of foreign activity in order to protect the integrity of our democratic institutes, systems and processes. It does not seek to restrict, deter or prohibit foreign actors from promoting their interests in Australia.

In practice, FITS requires any ‘person’ (individual or entity) who undertakes certain activities on behalf of a ‘foreign principal’ (foreign government, foreign government related entity/individual or foreign political organisation) to register under the scheme. Various reporting and disclosure obligations are then imposed on registrants to ensure ongoing compliance with FITS and transparency as to the nature of their relationship with a foreign principal.

While the Attorney-General’s Department has encouraged a number of Australian entities to evaluate their relationship with foreign bodies (including major banks, Channel Nine and Universities hosting China-funded Confucius Institutes), there are currently only 14 individuals and 34 entities recorded on the public register (as at 14 October 2019).

FITS will only be enlivened where the following requirements are met:

  • a person acts on behalf of a foreign principal
  • the activity is undertaken for the purpose of political or governmental influence
  • the activity falls within a ‘registrable’ category
  • no exemption applies.

In response to concerns about the vague drafting and potential overreach of FITS, the Federal Government sought to clarify the scope of several key provisions of the Act in April this year. Currently, activities requiring registration include lobbying (parliamentary and general political), communications activity (the distribution of information and material), disbursement activity, and any action taken by a former cabinet member or recent designated position holder on behalf of a foreign principal.

While penalties are yet to be imposed for non-compliance, a person risks up to 3 years imprisonment for providing false and misleading information to the Secretary and up to 5 years imprisonment for failing to register under FITS.

Key takeaway

Education sector bodies are encouraged to become familiar with FITS and consider whether any of their activities might be caught by the scheme. Universities in particular should be alive to the Federal Government’s focus on those institutes that host and/or receive funding from foreign bodies.

If you would like to discuss FITS and its potential application in further detail, please contact a member of our Education sector team.

Further reading

FITS Overview

https://www.ag.gov.au/Transparency

Factsheet 2 – What is the difference between ‘foreign influence’ and ‘foreign interference?’ released by the Attorney-General’s Department of the Australian Government in February 2019 < https://www.ag.gov.au/Integrity/foreign-influence-transparency-scheme/Pages/Resources.aspx>.

Author:

Louisa Nuccitelli | Senior Associate
+61 3 9258 3591
Louisa.Nuccitelli@maddocks.com.au

Michael Nicolazzo | Senior Associate
+61 3 9258 3306
Michael.Nicolazzo@maddocks.com.au

Isabella Stephens | Graduate Lawyer
+61 3 9258 3553
Isabella.Stephens@maddocks.com.au