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
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
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