Friday, 4 October 2013

Corporate Australia not immune to corruption

Corruption affecting Corporate Australia is on the rise.  This week, reports surfaced about alleged widespread bribery and corruption at one of Australia’s largest companies. Allegations of improper conduct by two subsidiaries of the Reserve Bank of Australia (RBA) that were previously charged in Australia’s first ever prosecution of foreign bribery laws in 2011 were also reported.

It has been alleged that an ASX 100 company, paid a $42 million kickback to Iraqi officials in order to secure a $750 million oil pipeline contract.  The Australian Federal Police are conducting an ongoing investigation into a matter that was voluntarily reported by the company.

Two RBA subsidiaries were prosecuted for foreign bribery in 2011 for alleged payments made to government officials in Indonesia, Malaysia and Vietnam between 1999 and 2005 to secure banknote contracts.  However, further allegations of attempts to do business with Iraqi officials were reported this week.

The message for Corporate Australia is clear - companies operating in high-risk countries and sectors must take accountability and ensure appropriate measures are put in place to prevent, detect and respond to all forms of bribery and corruption.  A commitment to the issue at board level is essential to driving and embedding a culture of compliance.

Bribery of foreign public officials is strictly prohibited under the Australian Criminal Code Act 1995 (Cth). Australia is under international pressure to increase enforcement of its foreign bribery laws following a review of its implementation of the OECD’s Anti-bribery Convention in October 2012, no Australian company is immune to an investigation.

Companies should consider the following key practical elements when developing an effective anti-bribery and corruption compliance program, proportionate to the risk faced, ensuring it goes beyond a mere ‘paper-policy’:

  • recognised commitment from the board and senior management
  • undertaking ongoing risk assessments
  • performing risk-based due diligence on third parties and agents, joint venture partners and when conducting M&A activity
  • raising awareness of anti-bribery and corruption issues through risk-based training and communication, and
  • monitoring and reviewing of policies and procedures regularly to ensure their effectiveness.

The consequences of bribery and corruption are detrimental to any company’s business.  Even mere allegations can lead to significant reputational damage and a fall in a company’s share price.  Prosecution can result in significant fines and jail sentences for individuals.

Tiffany is a Senior Associate at McCullough Robertson

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