The fight against corruption: protecting brand Australia

Possibly, for the first time in the history of business in Australia, we may see a series of prosecutions that specifically look at corrupt misconduct by an Australian organisation and its officials outside of the country.

Securency International, a maker of Polymer bank notes and partly owned by Australia’s Reserve Bank, is at the centre of a scandal involving tens of millions of dollars across multiple countries.

At the heart of the allegations lies the intent of officials to use third parties to secure lucrative contracts – in some cases, it would appear third parties who already have dubious reputations when it comes to doing business. While this is not a new event, we have seen bribery and corruption allegations come from the Australian Wheat Board (AWB) and sanction busting in Iraq, what is new is the possibility that these allegations could lead to prosecutions which could lead to convictions.

From an Australian perspective, both business and Government, it is important that the Securency case be tested through the courts for a couple of important points:

The validation of the appropriateness and consistency of our laws is the important first point. It has been the case for some time that other nation states such as the United States, go to great lengths to investigate and prosecute corrupt misconduct both by Government and business officials / representatives.

The United States Foreign Corrupt Practices Act  and the United Kingdom’s Bribery Act have the ability to prosecute cases that occur outside of the country of domicile and into the country where the misconduct may have occurred or where the allegations have been put.

In the case of Australia while we have legislation in place, the legislation has not really been tested to its full extent – that full extent either leading to credible convictions or the strengthening of the laws themselves. For example, there remains some confusion about the definition of a “bribe” and that of “facilitation payments”. As one senior legal expert pointed out recently the words “facilitation payments” are still used in the Income Tax Assessment Act.

In the case of the Australian Wheat Board there was an opportunity to test the veracity of the current legislation when, in 2005, it was discovered that more than $200 million had been paid to a Jordanian trucking company used to facilitate sales of wheat – in clear violation of United Nations sanctions.

While there was an immense amount of public disquiet, no criminal prosecution ensured. Then, in 2009, some commentators believed that there should be a deeper look at whether a mining company executive should face prosecution under the same legislative framework after being found guilty after receiving more than $700,000 in payments for awarding contracts preferentially. The scandal that has recently enveloped Alcatel recently made its way into Australia’s newspapers after it was discovered the current Head of the National Broadband Network made a series of incorrect statements about some of the key facts post his departure.

The second important part of this debate, and the opportunity the Securency case gives us, is to clear up the misconceptions that are out there which lead to other countries and officials believing that we here at home find any of this behaviour acceptable. In many ways we have to protect the “brand Australia” by showing we are prepared to prosecute, and where the evidence stands up to scrutiny, convict and jail.

There is a dilemma that we do face in the business community, particularly small to medium sized business and it is partly to do with understanding what can happen to us if our representative or employee does engage in this type of behaviour. Firstly, ask yourself this question: “Do I understand that I or my employees can be prosecuted at home for actions offshore?” many in the community would not know the answer to that question because it is not something that is normally taken into consideration when we deal outside of Australia. Certainly the Securency case heightens that awareness but not everyone will keep up with events and not everyone will be aware of the signs to be mindful of when dealing with third party agents or employees in foreign countries.

That is why it is a good time to increase the level of awareness through the sharing of information, the publication of information sheets or the promotion of materials that enable business operating in foreign countries to understand the implications of some of the decisions they may be considering. Companies need to improve monitoring and assessment of business development and marketing in developing countries and provide the appropriate guidance to employees. At the end of the day there is no excuse for corrupt misconduct, certainly not to the extent where tens of millions are involved.

At some point in this whole narrative is the age old human emotions of greed and want. So many people see the deal and believe the single biggest objective is to secure it. The fact is, if it walks like a duck and quacks like a duck it is not a fluffy pussy cat come to purr on the end of your bed – the final point I make whenever I give advice to Australian companies going down the path of developing business in foreign countries is the relaying of a story of a trade mission I was part of in Asia. Having finished speaking at a conference one day we all convened for dinner. One of the delegates regaled how he had met the perfect person who could take his business forward in this particular country.

After listening to him talk about the persons networks, connections and reputation he turned to me and said “I told you I would get someone to partner with today!”.

I said to him, “mate, I have been here often enough and long enough to know that sure, today, this bloke probably does sound and look like the right go – but this is a big country with many different faces to it. So, let me tell you something, there is always a bigger fish and your man sounds like a small one in a big pond.” Several years later the man had lost out, the business had failed and all of the various projects he had been banking on amounted to nothing. In having coffee with him last year I asked him “what went wrong?” he said to me simply and plainly “Matt, you were right, there were bigger fish.”

The moral of the story is fish are many in nature and type. If one fish is prepared to pay for a deal and another fish is prepared to take the money then ask yourself who is the bait?

Matthew Tukaki is the former Head of Drake in Australia and currently the CEO of The Sustain Group. Matthew is also the current Australian Representative to the United Nations Global Compact of which Anti-Corruption is a key Principle. The UNGC is the world’s largest corporate citizenship program with more than 6,000 signatories. For more information on The Sustain Group go to www.sustaingroup.net or for the UNGC go to www.unglobalcompact.org. Email Matthew directly at matthew.tukaki@sustaingroup.net.