Legal Insights

Under the Influence

By Michael NicolazzoIsabella Stephens

• 17 October 2019 • 3 min read
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The Federal Government is focused on monitoring acceptable forms of influence over, as opposed to interference with, governmental and political processes.

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

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.

By Michael NicolazzoIsabella Stephens

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