Australia’s efforts against foreign bribery – an update

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Australia’s efforts against foreign bribery – an update

Posted 1/11/2012 by Cat Barker

The Organisation for Economic Cooperation and Development (OECD) released its latest assessment of Australia’s implementation of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (Anti-Bribery Convention) in October 2012. Outlined below is an overview of the positive and negative findings and their implications for the Australian Government.

The Anti-Bribery Convention was adopted in 1997 to address the widespread phenomenon of bribery in international business transactions. It entered into force on 15 February 1999 and has been ratified by all 34 member countries of the OECD (of which Australia is one) and five other countries. 

The Anti-Bribery Convention is one of the key international instruments on corruption, along with the 2005 United Nations Convention against Corruption (UNCAC), which Australia has also ratified. The focus of the Anti-Bribery Convention is on the ‘supply side’ of bribery—that is, the offer, promise or giving of a bribe, as opposed to the solicitation, acceptance or receipt of a bribe. 

Australia ratified the Anti-Bribery Convention in 1999 and underwent its third formal evaluation this year. Detailed information on the Anti-Bribery Convention, Australia’s implementation of it and the results of previous evaluations are set out in a Parliamentary Library Background Note published in February 2012. The principal obligation is criminalisation of the bribery of foreign public officials. Other obligations include: 
  • effective prevention, detection and reporting of foreign bribery 
  • effective investigation and prosecution of foreign bribery and related conduct 
  • providing for confiscation of bribes and the proceeds of bribery and 
  • taxation measures to combat bribery. 

Positive developments 

The report of the OECD Working Group on Bribery (Working Group) identifies the following positive developments since 2008, when it published a follow-up report to its 2006 evaluation of Australia’s implementation of the Convention: 
  • foreign bribery is becoming a priority for the Australian Government 
  • the announcement of the development and implementation of a whole of government National Anti-Corruption Plan (expected by the end of 2012) 
  • significant increases to the maximum penalty for individuals and bodies corporate for the foreign bribery offence in the Criminal Code Act 1995 
  • public consultation on the existing facilitation defence to the foreign bribery offence (which permits benefits of a minor nature for the dominant purpose of expediting or securing the performance of a routine government action of a minor nature, provided appropriate records are made and kept) and 
  • improved sharing of taxation information. 

Areas requiring improvement 

While the Working Group welcomed Australia’s recent efforts, it has ‘serious concerns that overall enforcement of the foreign bribery offence to date has been extremely low’ (p. 4). In particular, of 28 referrals to the Australian Federal Police (AFP) for foreign bribery, 21 have been concluded without any charges being laid. Of the remaining seven, only one has so far resulted in prosecutions, with charges laid against Securency International, Note Printing Australia and several individuals beginning in July 2011. The Working Group made 33 recommendations and identified a further 11 issues that it would follow up (by comparison, in 2006 the Working Group made 19 recommendations and identified six issues for follow-up). Tellingly, the first recommendation is that Australia review its overall approach to enforcement in order to effectively combat international bribery of foreign public officials. Another was that the AFP: 
  • take sufficient steps to ensure foreign bribery allegations are not prematurely closed 
  • be more proactive in gathering information at the pre-investigative stage 
  • take steps to ensure it explores all avenues for exercising jurisdiction over related legal persons (such as corporations) in foreign bribery cases 
  • continue to systematically consider concurrent or joint investigations with foreign or other domestic law enforcement agencies and 
  • routinely consider investigations of related charges such as false accounting and money laundering, especially when a substantive charge of foreign bribery cannot be proven. 
Other recommendations included:
  • increasing the maximum penalty for legal persons for false accounting to a level that is effective, proportionate and dissuasive 
  • ensuring the Commonwealth Director of Public Prosecutions has sufficient resources to prosecute foreign bribery cases 
  • improving awareness among state law enforcement officials and the private sector, including targeting companies (particularly small and medium enterprises) that conduct business overseas 
  • improve foreign bribery reporting requirements across the Australian Public Service and for officials and employees of independent statutory authorities 
  • introduce whistleblower protections for public and private sector employees who report suspected foreign bribery to competent authorities in good faith and 
  • consider taking concrete steps to encourage companies, ‘in the strongest terms’, to conduct due diligence on agents, including those referred to them by Austrade (one of several recommendations of direct relevance to the current prosecutions). 

Implications for Government 

The Attorney-General’s Department has been tasked with developing Australia’s first National Anti‑Corruption Plan by the end of 2012. Combating foreign bribery is only one aspect of the broader anti-corruption framework. However, the extent of the issues identified by the Working Group, and the public attention on the issue following allegations of foreign bribery within Reserve Bank of Australia subsidiaries, means there will be pressure for the Plan to adequately respond to at least the key recommendations. 

A 2011 study undertaken by CAER—Corporate Analysis. Enhanced Responsibility. for the Australian Council of Super Investors found that 75 per cent of the top 100 and 63 per cent of the top 200 companies listed on the Australian Stock Exchange operate in a high-risk sector, a high-risk country or both. In chapter seven of the Australia in the Asian Century White Paper the Australian Government has outlined a number of national objectives with the aim of making the most of growing markets in Asia, such as increasing Australia’s trade links with Asia from one quarter in 2011 to one third by 2025. Australia should of course attempt to capitalise on the economic rise of the Asian region, but it should also ensure that corruption risks are appropriately managed in doing so. 

Transparency International publishes an annual Corruption Perceptions Index that ranks the perceived level of public sector corruption in different countries based on a variety of surveys and assessments on issues such as bribery of public officials, kickbacks in public procurement and embezzlement of public funds. The 2011 Corruption Perceptions Index ranked 183 countries. While some Asian countries, such as Singapore (ranked 5th), Hong Kong (12th) and Japan (equal 14th), ranked among the least corrupt countries along with Australia (ranked equal 8th with Switzerland), others did not fare so well. Malaysia came in at 60, China at 75, India at 95, Indonesia at 100, Vietnam at 112 and Myanmar at 180 out of 182, ahead only of North Korea and Somalia tying for 182nd place. With Australian foreign bribery prosecutions on foot involving allegations of the bribery of officials in Vietnam, Indonesia, Nepal and Malaysia, the increasing integration of Australian organisations into Asian markets should take place alongside significant improvements to Australian efforts to combat foreign bribery.

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