Renewed claims before the Victorian Supreme Court that Leighton Holdings engaged in corrupt practices, allegedly paying a $42 million kickback to Iraqi officials, have once again called into question the scope and effectiveness of Australia’s anti-corruption laws. For the good of Australian business and the people with whom we trade globally, it is time for Australian lawmakers to look at what is working in other jurisdictions and advance a more ambitious national agenda against corruption.
The tune of the Leighton story sounds disturbingly familiar. It echoes aspects of the scandal surrounding Australian Wheat Board (AWB) payments to the Iraqi Grain Board in contravention of UN sanctions. It also strikes a chord with allegations recently made against directors of Securency and Note Printing Australia (NPA), as well as Reserve Bank officials.
Allegations of this kind do not go unnoticed internationally, whether or not ultimately proven. Indeed, Australia’s global reputation appears to be suffering. Each year, Transparency International publishes a global Corruption Perception Index, capturing perceptions of the extent of public sector corruption in various countries, according to business people and area specialists. In 2007, Australia moved down two places on this Index, following the failure to bring any criminal prosecutions in the wake of the Cole Inquiry into the AWB scandal. In 2012, Australia was ranked equal seventh on this Index, behind regional competitors New Zealand and Singapore.
Australia must take this feedback seriously. We need to draw upon the experience of other countries to boost the reach and robustness of our anti-corruption laws. Approaching this issue from a comparative perspective would not only enhance Australian fulfilment of our international obligations; it could improve Australia’s global competitiveness and economic performance, while contributing to a more effective framework to combat corruption worldwide.
We are already a part of such a global framework. In 1999, Australia became a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions. In line with this Convention, Australia introduced the offence of bribing a foreign public official into the Commonwealth Criminal Code. In 2007, following the Cole Inquiry, this law was tightened in a range of ways. Also, following criticism from the OECD, Australia’s maximum penalty for bribery offences was substantially raised in 2010. We have been a party to the UN Convention against Corruption since 2005 and participate in a range of other global anti-corruption initiatives.
Despite these efforts, Australian legislation remains meek in comparison to the extensive anti-corruption regimes operating in the US and the UK. Unlike relevant parts of Australia’s Criminal Code, the US Foreign Corrupt Practices Act (FCPA) extends its jurisdiction beyond US companies, residents and citizens. The FCPA applies to foreign entities or individuals who engage in any act furthering bribery while they are in US territory, as well as to actions taken worldwide on behalf of US companies and individuals. It also prohibits corruption by foreign businesses financed under US securities laws. It can even apply to entities or individuals who merely use mail or instruments of interstate commerce in carrying out prohibited conduct (such as sending an email via the US or paying funds into a US bank account). Companies subject to this law have been held accountable for simply promising a bribe, even where it was not ultimately paid.
Also far broader than Australian law is the UK’s Bribery Act, which extends not only to bribes paid to public officials but also to commercial bribery among private citizens. It may also capture bribes paid by or on behalf of a company incorporated outside the UK, provided that the company conducts part of its business in the UK.
We should consider such models, among others. Recent scandals signal the need for Australia to adopt a more strident legislative tone against corruption.
Australians have long congratulated ourselves on being well liked in the international arena. We cannot, however, rest on our (arguably wilting) reputational laurels. Bribery by Australians, and those identified with Australia, in the conduct of global business tarnishes the reputations of us all. It undermines diplomatic and commercial relationships and disadvantages all those who adhere to relevant national and international laws. Australian lawmakers need to strike a higher, louder, more uncompromising note against corruption, to take the likes of the Leighton, Securency and NPA scandals off repeat play.
Associate Professor Fleur Johns is Co-Director of the Sydney Centre for International Law at the University of Sydney. David Hertzberg is an intern at the Sydney Centre for International Law at the University of Sydney.
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