The risk of corruption to Australian businesses is increasing at an alarming rate. It was recently reported that in the last five years, one in five Australian organisations have detected an incident of bribery affecting their business. Despite this, many companies still lack appropriate measures to mitigate corruption risk.
Around the world, enforcement bodies are increasing scrutiny of anti-bribery and corruption compliance regimes. Businesses caught unprepared face costly consequences. The significance of this cannot be overstated. The risk is not only at business level; in regions such as the US and UK, compliance officers are also coming under the spotlight of regulators.
Global responses to corruption and other global regulatory trends are highlighted in Dentons’ pick of global regulatory trends to watch in 2017.
Some recent trends to also watch:
- The UK’s Serious Fraud Office has demonstrated its commitment to penalise organisations engaged in bribery and corruption by their decision to enter into a significant Deferred Prosecution Agreement with Rolls-Royce. An investigation by the Office revealed incidents of bribery by Rolls-Royce agents across seven jurisdictions for the purpose of securing multi-million dollar contracts.
- In some cases regulatory bodies in the UK and US have directly charged compliance officers for either failing to prevent their companies from committing financial crimes or failing to submit the required regulatory disclosures.
- Closer to home, the Chinese government is reviewing their Anti-Unfair Competition Law, which includes commercial bribery. They have also committed to enforcing anti-corruption laws by penalising organisations involved in bribery and corrupt practices.
Perception is reality
As Australian businesses become more global and business activity channels more complex and interconnected, the threat of third party corruption and foreign bribery is heightened.
Australia has steadily declined on Transparency International’s Corruption Perception Index, having fallen seven places since 2012. This year's results reveal a global emerging trend, with more countries perception ranking declining than improving. These results highlight the need for organisations to proactively take steps to prevent incidents of corruption.
The Australian government has acknowledged the threat of corruption to Australian businesses. In response, a Parliamentary Inquiry into foreign bribery has been commissioned, with the inquiry committee currently seeking submissions and due to report on their findings in December this year.
Additionally, in March this year, the Crimes Legislation Amendment (Powers, Offences and Other Measures) Bill 2017 was introduced into the Legislative Assembly. The bill seeks to permit the government to collect, use and disclose personal information to assist the Australian Federal Police detect and investigate corrupt or fraudulent behaviour by Australian organisations dealing with the Australian government.
Serious implications call for immediate action
Financial costs of litigation, fines and penalties as well as reputational damage are some of the key risks organisations may face should an incident of bribery or corruption occur.
Standing still in the face of heightened corruption risk is simply not an option. The best way to start is taking a hard look at your compliance policies and risk assessment procedures.
Your business needs to carefully consider its ability to effectively manage any bribery or corruption incidents. Have you currently got an ABC framework or policy in place? You should consider reviewing your policies to help safeguard your organisation, bolster your position and effectiveness in dealing with any incidents of corruption that may arise.