Foreign bribery and corruption will thrive in Australia until we make crucial regulatory and institutional reforms – and provide regulatory authorities with the right tools to address bad behaviour – according to ANU corporate law expert, Associate Professor Kath Hall.
Foreign bribery and corruption will thrive in Australia until we make crucial regulatory and institutional reforms – and provide regulatory authorities with the right tools to address bad behaviour – according to ANU corporate law expert, Associate Professor Kath Hall.
In a paper to be presented to the ANU College of Law National Law Reform Conference, Associate Professor Hall argues that while Australia’s regulatory authorities are diligent and conscientious, the deficiencies in corruption regulation have been on show this year.
With Leighton Holdings back in the news over the Unaoil bribery and corruption scandal, and the Panama tax evasion scam sending shock waves around the world, serious questions need to be asked whether enough is being done In Australia to deter illegal activities by large companies.
“Australia’s regulatory authorities are generally under-resourced, uncoordinated and have insufficient tools to deal with foreign bribery and corruption - and corporations have no incentives to own up to illegal activities within their own organisations,” Dr Hall said.
“The lack of a Federal anti-corruption body is one obvious area for reform if Australia is to make inroads into this area. A properly resourced anti-corruption body would be able to address the scale and complexity of corporate corruption being perpetrated as well as the drivers for corruption.
Dr Hall said that while we need this bigger stick to deal with corruption, we also need more carrots.
“Australia is likely to have greater success in rooting out foreign bribery and corruption if regulatory authorities work with companies to tackle bad corporate behaviour.
“If we tackle transnational corruption as a corporate governance issue – not just a criminal one - and give companies greater licence to tackle it themselves, we are likely to see an overall improvement in corporate behaviour.
“Unlike the United Kingdom and United States, Australia doesn’t offer any incentives to company boards to come forward if and when they uncover foreign bribery and corruption in their organisations.
Dr Hall noted that a discussion paper has recently been issued on the issue of whether deferred prosecution agreements should be introduced in Australia. These agreements are increasingly being seen as the best way of offering incentives to companies to proactively contact authorities if corruption occurs, and come to a mutual agreement on how it might be rectified.
“Deferred prosecution agreements have existed in the US for many years and have recently been introduced in the UK. They grant companies an opportunity to clean up their organisation under the watchful eye of authorities and the oversight of the courts.
“In a deferred prosecution agreement, a company makes an undertaking to address corruption in their organisation within a specific timeline – if they don’t deliver on those undertakings, or meet the deadlines required, they are subject to prosecution.”
Dr Hall said the adoption of the UK model – where its increased role for supervision by the courts – would not only offer a further mechanism for regulators to deal with corruption, it would also improve transparency and encourage compliance by the company itself.
“If the AFP or ASIC take action against a company involved in foreign bribery or corruption, the matter will proceed to a costly and protracted court proceeding, unless the company pleads guilty. There are no alternative methods of settlement.
“Introducing a process of prosecution agreements such as that used in the UK would ensure that any agreement is made public and if it is not honoured, the matter would go through to prosecution.
“Australia’s regulatory authorities need the option for deferred prosecutions if they are to have the tools to effectively deal with foreign bribery and corruption, and better support companies who want to be compliant,” Dr Hall said.
The National Law Reform Conference is on 14–15 April, at University House, The Australian National University. It will bring together legal practitioners, policy experts, researchers and academics, and provide a forum for research about law reform and future directions in six key areas, including public law, civil law, criminal law, commercial law, environmental law and legal practice.
BY LYN LARKIN
