Up until recently it was the accepted school of thought that corruption was not a significant risk for Australian companies. It was instead viewed as an overseas problem. However, recent events point to the fact that Australian companies are just as exposed to corruption risks as their overseas counterparts. Let’s examine some of the key drivers:

Globalisation: In an increasingly globalised economy, Australian companies are expanding their customer base and supply chains into Asia, the Middle East and Africa, creating an exposure to the significant corruption risks associated with those jurisdictions.

Overseas law: This globalisation trend is compounded by the fact that the operations of Australian companies can be caught in the regulatory reach of countries that have been very tough in pursuing corrupt corporate practices, such as the United States, China and the UK.

Australian law: Back in October 2012 a strongly worded report from the OECD criticised the lack of enforcement of Australia’s anti-corruption laws. In response, the Australian government and its agencies have given a clear indication that they will be ramping up their enforcement efforts with the creation of the new federal Fraud and Anti-corruption Centre (July 2014). Stronger federal anti-corruption laws and fines are also likely to be on the agenda as a response to the OECD report.

State governments: Each Australian State now has an independent anti-corruption body. While their jurisdictional reach centres on public sector corruption, investigations inevitably expose corruption in the corporate sector. The NSW, ICAC, has been among the most active anti-corruption bodies in the past two years. Victoria’s IBAC, established in 2011, is set to get stronger investigation powers.

Australian media: The Australian media has taken an active interest in exposing the corrupt practices of Australian companies and their directors. Numerous Australian companies have been in the firing line. Even in the absence of regulatory action, the airing of corruption allegations on the front page of the newspaper can have a massive impact on corporate reputation and shareholder value. Leighton Holdings learned this lesson the hard way when the Fairfax media ran a series of articles in October 2013 about alleged corruption within the company resulting in a 10% slump in Leighton Holdings’ share price in a single day.

New CSR focus: Just as climate change and human rights were the big ticket sustainability and CSR issues of the last decade, anti-corruption has emerged as a new focus of the current decade. The World Bank, OECD, UN, WEF, G20, and the IMF are all very active in this area. Australia is presently the chair of the G-20 Anti-corruption working group. Transparency International has joined Greenpeace and Amnesty International to become one of the world’s most influential International NGOs. 

With Australian companies becoming increasingly exposed to corruption risks, the importance of having in place an effective anti-bribery and corruption program is paramount. It is no longer solely a concern for overseas companies.  

To learn more about our anti-corruption services, please visit www.crglobal.com.au

Michael Kerr

Director, CR Global 

The benefits of social media are obvious. It is fun, informal, instantaneous, cheap and, let’s facebook it, if you are not following, tweeting, updating, face-timing or linking in, you are behind the times.

In a world where you can have thousands of friends who know more about your social life than your family, new communities springing up around you to direct advertising at and people following you who you have never met, is it all too good to be true? 

Like any form of advertising, marketing and communication, a company needs to consider not only the benefits but also the hidden costs and risks.  

We all know about the opportunities for hackers to steal our identity, so strong password management and security settings are critical. But before you update your status, also consider the risks that can be caused by your employees:

o   An M&A lawyer for an IT company tweets to announce his arrival in Taiwan. One of his followers is a journalist who suspects the reason for him being in this city is that his company is about to merge with another less successful IT company based in Taiwan. This innocent update fuels a rumor that the company is merging and shares drop overnight.

o   Employee X has just been informed that there may be job losses in his region over the next 6 months. X uses their personal social media account to complain about this. Their post is picked up by a friend who is prompted to respond by tagging a photo of X in an uncompromising position drunk from the previous night with a comment “given the state of most of its staff, it’s no wonder they’re making job cuts”. Each contributor has around 1000 friends each. There are then 10 friends of friends commenting on the tagged photo and state of your company which becomes a talking point on facebook and twitter and goes viral around the world.

Mitigation:

• Uninformed employees are just one issue for you to bear in mind. Before commencing, or when reviewing, a social media campaign it is advisable to carry out a risk analysis. This will enable you to determine:
• The requirement for policies and standards and whether other policies (such as electronic resources and discrimination, bullying and harassment) need updating
• Training for employees on the dos and don’ts of social networking
• What resource and expertise is needed to properly maintain social media sites and keep up with trends – nb: must respond to comments, tweets etc. promptly. If you do not – could face criticism.
• What maintenance is required to ensure relevant expertise and regular monitoring.

Please contact us via www.crglobal.com.au if you require further advice on the potential risks to your business, training of your staff, and drafting or updates to your policies.

Nicole Rose