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Australian Companies Exposed to Bribery-Risk

Firm News
22 November 2011
Baker & McKenzie launches bribery and corruption report at Parliament House

Sydney / Melbourne, Australia, 22 November 2011 – Baker & McKenzie has launched a report at NSW Parliament revealing many Australian companies are lagging behind global anti-bribery standards and could be at risk.  This comes just a week after Minister for Home Affairs, Brendan O'Connor, announced he was seeking public comment on a proposal to change Australia's anti-foreign bribery laws.

Baker & McKenzie is the first law firm in Australia to publish research into bribery and corruption issues currently affecting Australian companies and multinationals. Appropriately, Mr. Mark Speakman, SC MP, who chairs the Committee on the Independent Commission Against Corruption, helped launch the report.

Bribery: Do Australian Companies Take it Seriously? is Baker & McKenzie's first report in the firm's Global Business Challenges series, designed to offer clients and the broader market thought-provoking commentaries on current and emerging legal issues and trends.

The report is based on the views of C-Suite and senior executives from 81 Australian organizations across various industries surveyed by Beaton Consulting. It explores how companies are navigating the increasing risks associated with bribery and corruption particularly when operating overseas.

Baker & McKenzie’s Head of Dispute Resolution Asia Pacific, Mini vandePol, said, “Minister O'Connor said in his recent announcement [15 November] that Australia has a strong framework in place to combat all types of corruption. Yet, Transparency International has actually criticized Australia's enforcement record. In addition, only 36% of our survey respondents believed that Australia has adequate enforcement."

Ms. vandePol added that there were some benefits to tighter regulation.

“It's not just about risk, it's about reward. Tighter regulation levels the playing field and encourages companies to operate appropriately and ethically wherever they do business,” she said.

Respondents to the Baker & McKenzie survey revealed the most common motives to implement anti-bribery measures is a desire to be an ethical company and to enhance the company's reputation.  According to Ms vandePol, this result shows that companies appreciate that the rewards of good compliance go further than risk mitigation. Worryingly however, it also suggests that companies are approaching these measures as optional-extras rather than an essential part of their compliance framework.   

“Global trends illustrate that companies using third parties, or intermediaries, in business dealings could be highly vulnerable to the risks of bribery and corruption. Our survey revealed that 13% of respondents do no monitoring of intermediaries in high risk jurisdictions such as China and India, and this rises to 23% in the energy and resources sector”, said Ms vandePol.

Recent public debate has focused on whether bribery and corruption should be policed by a specifically tasked regulatory body.  The majority of survey respondents (39%) considered that the existing enforcement body, the Australian Federal Police, is the appropriate body, while 28% of respondents supported the idea of a specifically tasked regulatory/enforcement body.

In response to Minister O'Connor's request for comments on facilitation payments,  Ms vandePol said, "Regardless of whether Australia changes its laws, companies should consider whether permitting their employees to make facilitation payments is advisable given the number of jurisdictions in which they are illegal and the difficulty for employees to determine what is a facilitation payment and what is an illegal bribe".

Baker & McKenzie will launch its next thought leadership report in the firm's Global Business Challenges series in March 2011.

Read report here.
For further information, please contact:
 
Head of Corporate Affairs
+61 2 8922 5275
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