11/09/2007 - 22:00

Action on sanctions breaches

11/09/2007 - 22:00

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New legislation affecting Australian exporters has been introduced by the federal government in response to last year’s Cole inquiry into the AWB’s Iraq trade dealings, which will codify three of the inquiry’s recommendations.

Action on sanctions breaches

New legislation affecting Australian exporters has been introduced by the federal government in response to last year’s Cole inquiry into the AWB’s Iraq trade dealings, which will codify three of the inquiry’s recommendations.

The International Trade Integrity Bill (2007), which was introduced in parliament in mid-June, will strengthen the ability of government agencies to penalise companies that breach United Nations sanctions in their trading activities.

It will also amend existing legislation to significantly increase penalties against individuals and companies that breach UN sanctions affecting a group of 12 countries, which includes Iran and North Korea.

The legislation will give a number of agencies, including the Department of Foreign Affairs and Trade and Customs, the power to compel businesses and individuals to provide evidence of their compliance with UN sanctions.

Parties that conduct business with a sanctions regime will be required to keep documentation of their permit applications for five years.

The legislation will also amend the Customs Act to introduce a new offence for parties importing or exporting sanctioned goods without a permit, or who provide false or misleading information when applying for a permit to trade with a sanctions regime.

DFAT is conducting a series of seminars nationally to brief the business community, state governments and federal agencies about the new legislation.

For corporations, the penalty for a breach of sanction is $1.1 million, or three times the value of the transaction, whichever is larger.

Individuals may be subject to 10 years’ imprisonment and a fine of $275,000, or three times the value of the transaction. The bill does not contain specific protection for whistleblowers in corporations.

Speaking at a seminar in Perth last week, DFAT international legal branch assistant secretary, Adam McCarthy, said it was important for businesses to understand the new legislation was highly targeted to prevent specific activities, such as supplying goods that could be used in weaponry.

“These sanctions are significantly different to what they were 20 years ago in the days of blanket trade bans,” he said.

“We have an expectation that 99.9 per cent of businesses will be able to comply with the UN sanctions, it’s just a question of getting the information out there.”

Mr McCarthy said DFAT hoped to communicate to industry that the regime of trade with UN sanctioned countries was changing.

“We want this [legislation] to be a red flag when the question of dealing with these countries comes up,” he said.

DFAT representative Peter Scott said the new penalties would provide a deterrent against bribery or other misconduct, which did not currently exist. 

“We’re seeking to ensure we do this in a way as to make businesses as free as possible to achieve their goals,” he said.

Mr Scott said it was unlikely an international court would be established to enforce sanctions.

He said the onus was on Australian companies to perform due diligence and ensure their trading partners were not breaching sanctions.

“The Australian exporter has to obtain from the end user a guarantee that goods are to be used for their agreed purpose,” Mr Scott said.

“It may well be that the first an exporter knows of (a breach) is at customs.”

Mr Scott said DFAT had written to the Law Council of Australia regarding the bill and hoped to meet with legal personnel to discuss it further.

There will be a six-month delay between the bill receiving Royal Assent and the legislation, which is not retroactive, coming into effect.

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