19 September 2012

The Deloitte Australia and New Zealand bribery and corruption survey published last week highlighted the risks facing businesses operating in jurisdictions where “money talks”.

Many responses suggest that the commitment required of State sector agencies to ensure staff are familiar with integrity obligations, is not well developed in companies operating internationally. Extractive industries seem to be most at risk.

The experience of the Australian Reserve Bank subsidiary Note Printing Australia with senior staff making improper payments of millions of dollars to obtain contracts – on top of the earlier oil for food scandal involving the Australian Wheat Board – confirm that all areas of trade are susceptible.

Deloiite advised companies looking for growth and new business opportunities offshore that “engaging in corrupt behaviour in high-risk countries, because it is seen as the way business is done, will no longer be tolerated as an excuse, …Stakeholders including governments, regulators, law enforcement agencies and customers are demanding the strongest commitment to ethical business dealings. Ignorance and inactivity … exposes directors, senior executives and employees to increasingly serious sanctions…”
The survey indicated that 80% of businesses with offshore operations did not regard foreign bribery and corruption as a high or relevant risk, A consequence is that companies are ill-equipped to identify, manage and prevent the inevitable corruption challenges.

It is apparent that in Australasia the legal profession has yet to latch on to the revenue stream flowing from promoting compliance with provisions like the Bribery Act (UK) and Foreign Corrupt Practices Act (US) as have their British and American counterparts – although that work has not precluded the imposition of some of the largest penalties by Britain and the United States authorities on companies from the least corrupt jurisdictions.

In the latest Worldwide Governance Indicators, the countries in the 90th percentile for control of corruption (21 from the 213 assessed) were: New Zealand. Denmark. Netherlands, Iceland, Finland, Sweden, Norway, Greenland, Australia, Canada, UK, Ireland, France, Germany, Austria, Belgium, Luxembourg ,Liechtenstein, Switzerland, Singapore and Chile.