Corruption claims hurt biggest NSW operator of speed cameras

Redflex, an Australian company which is the main operator of speed and red light cameras in New South Wales, has been declared unfit to bid for contracts in Chicago, based on allegations it has been involved in corruption. Recently, Chicago mayor, Rahm Emanuel, said he would not allow Redflex to bid for a further red light camera program after new allegations that the company had misled the city. Redflex, which is listed on the Australian Securities Exchange, first became the subject of bribery allegations when the Chicago Tribune alleged it had paid a $US910 hotel bill for the city official in charge of granting red-light camera contracts.  It was further alleged that the official’s friend had received more than $US570,000 in lobbying commissions since Chicago's red light camera program began. Redflex is reported to be undertaking an internal investigation which has uncovered further improprieties within the company.  It has also been reported that other US cities that have engaged Redflex have indicated they may reconsider their contracts when the time comes for their renewal.

Beef importer caught ‘bribing’ Indonesian MP

Two directors of Indonesian company Indoguna Utama were caught by Indonesia's Corruption Eradication Commission while they were allegedly in the process of paying a $US100,000 bribe to Indonesian officials in an effort to circumvent the country's quota on beef imports. It has been reported that the company has deep links to the Australian beef market, with a number of Australian exporters using the company to bring beef into Indonesia.  One of those Australian companies is partly owned by a shareholder of Indoguna.  Suswono, Indonesia's Agriculture Minister, imposed import quotas on beef after Australia’s ban on live cattle exports in 2011.  That ban has reportedly led to a shortage of beef in Indonesia, and increased the incentive for companies to pay bribes to circumvent the quota system.

Developments in Australian Domestic Corruption Investigation

While Australian federal authorities have been increasing their scrutiny of foreign bribery offences, recent high-profile enforcement activity in New South Wales reflects the potential risks arising from Australian domestic corruption offences. The NSW Independent Commission Against Corruption (ICAC) has, since November 2012, had a series of inquiries looking into the circumstances surrounding the granting of mining and exploration licences by the New South Wales government.

ICAC is a statutory body established to investigate potentially corrupt conduct in the New South Wales’ public sector. It may also, in any final report by ICAC, recommend that the advice of the Director of Public Prosecutions be obtained on whether a person should be prosecuted, including private individuals or entities.

This trend of domestic corruption-related enforcement activity looks set to continue. In NSW, the possibility of further inquiries is being canvassed. Meanwhile, both Victoria and South Australia have recently established new corruption commissions, with the States of Victoria and South Australia setting up their own equivalents of ICAC. These developments suggest heightened scrutiny of business interactions with Australian government officials going forward.

Sanctions developments in Australia – Zimbabwe and Myanmar

In early March, Australia eased its autonomous sanctions against Zimbabwe, removing 55 individuals from its list of individuals and entities with whom Australians are prohibited from dealing. That relaxation was in response to Zimbabwe’s agreement to hold a constitutional referendum, and reflected the first stage of Australia’s previously announced three-stage process to reducing sanctions against Zimbabwe. Australia’s Foreign Minister Bob Carr indicated that the second stage of sanction reductions would occur once the referendum had been held, and that the final reductions would come after the holding of free and fair elections.  Zimbabwe’s referendum took place on 16 March, leading the EU to also remove a raft of sanctions which had previously prohibited dealing with various Zimbabwean companies and people.  Australia is yet to implement its second stage of sanction reductions.

The shift to reward Zimbabwe for its progress toward democracy is similar to the Myanmar experience. Australia relaxed sanctions against Myanmar in June last year. In March this year, Australia also hosted Myanmar’s President, Thein Sein; that visit served as the occasion for Australia to announce greater economic support for Myanmar, including the establishment of a local Austrade presence and a $20 million grant to strengthen the country’s democratic and economic institutions, with particular focus on its mining industry. However, while sanctions have been relaxed, there remain strict prohibitions in relation to the supply of arms and related materiel to Myanmar, as well as a range of export prohibited goods and services. Similarly, regardless of the ultimate sanction regime that remains in place against Zimbabwe after elections, exports to the country will likely remain subject to important restrictions.