03/09/2008 - 22:00

Corruption reporting compliance call

03/09/2008 - 22:00

Bookmark

Save articles for future reference.

Companies that don't have a culture of compliance and policies to deal with bribery in foreign jurisdictions could be vulnerable to prosecution under new amendments to the criminal code.

Corruption reporting compliance call
ACTING: Michael Blakiston says the tighter regime meant greater scrutiny is being applied to foreign operations.

Companies that don't have a culture of compliance and policies to deal with bribery in foreign jurisdictions could be vulnerable to prosecution under new amendments to the criminal code.

The tightening of laws relating to bribery of foreign officials contained within the Criminal Code Act 1995 came into force in November last year, following the fall-out of the AWB oil-for-wheat scandal.

Blakiston & Crabb Solicitors partner Michael Blakiston said the tighter regime meant actions that people thought were acceptable in the past could now come under greater scrutiny.

"In the West there's been a big push to tighten up and prevent suppliers from doing it, and on the demand side a lot of the grant monies are now tied to countries that have adopted far more transparent approach to how they use that money," Mr Blakiston said.

Lawyer Caroline Keats said mining companies that worked in jurisdictions where corruption, or the perception of corruption, was relatively high, such as Africa, Papua New Guinea or Egypt, were often exposed to bribery practices.

"With our clients operating in those environments we see it all the time; people asked to be paid money," Ms Keats said.

Under the amendments to the criminal act, the possible defences for bribery have been tightened and can extend to the corporation, not just an individual.

Corporations could also be liable for the actions of a local representative in a foreign country.

Ms Keats said one of the best ways for a corporation to protect itself from prosecution was to build a culture of compliance within the company, with management openly communicating policies and procedures to staff and suppliers.

"If one of their individuals out on the field committed an offence, and the company has no procedures or policies or things in place, like good corporate governance practices that prevent it, then it's almost as if they have intentionally allowed that act," she said.

"So criminal responsibility can be attached, and that's where companies have been totally unaware of their vulnerability."

According to Mr Blakiston, companies create problems for themselves if their culture allows individuals to believe they have the endorsement of the board.

"If they believe the accounting system is never questioned, that the monies have flowed through the accounts to allow them to do it [pay for bribes], that suggests the culture of the company has got a problem," he said.

New research by the Association of Chartered Certified Accountants and Net Balance Foundation Ltd found that Australia's top companies were failing to follow global guidelines on bribery and corruption reporting and fell short of world's best practice.

The Bribery & Corruption Report scored the overall performance of the ASX50 in terms of their transparency and disclosure of anti-bribery and corruption prevention initiatives.

Stockland was the top scorer with 80 per cent, followed by BHP Billiton with 73 per cent and Rio Tinto with 66 per cent.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

Subscription Options