Today’s interview is with Julian Fenwick and Jane Ellis, both Anti-Bribery Compliance Professionals in Australia. Given the recent reporting concerning anti-bribery, corruption, and compliance issues in Australia, I thought this would be a timely subject and to bring in two experts from the front-lines.
Hello Julian and Jane, thank you for joining me in today’s interview, as we try to share some of the issues relating to anti-bribery enforcement and compliance in Australia. Also, thank you again for inviting me to share my own perspectives with your clients in Sydney, Melbourne and Perth in our telecast conference on March 12th, 2015. I was really impressed not only with your sense of organisation, in pulling together a video conference across sixteen time zones, but the questions which your clients asked as I shared my own perspectives. Jane, you were a worthy interlocutor and I hope we can continue our dialog. So first, perhaps you and Julian can share some of your own backgrounds and experience for today’s readers.
Jane: Thank you, Richard. I was pleased to have the opportunity to interview you and to learn of your experience with the ‘dark side’ of international business. I am a senior lawyer, consultant and the Principal of Assertia Pty Ltd (see: www.assertia.com.au). However, I will shortly be winding up my business to move to London and assume the role of Director, Legal Projects at the International Bar Association. Prior to establishing Assertia, I was a partner at an international law firm in Sydney. I’ve been an active member of the Australian chapter of Transparency International since 1996 and have been a board member since 2001 (with a gap of around 3 years).
Julian: Thanks Richard. My background is in developing legal compliance training. Initially we started as part of an innovation team in a major Australian law firm. We began by producing competition law courses and we were one of the first organisations to do this using computer based training or what is now known as eLearning. Australia was one of the leading markets in the field due to the size of the country and the dispersed nature of organisations across the different cities. Since beginning in 1999, the business grew both in the number of courses we developed and the number of organisations we were working with. Today we are an independent and fast growing company providing a vast range of customized and off the shelf training courses specific to the Asia Pacific region (see: www.grcsolutions.com.au).
Over the past few years, bribery and corruption has been a very hot topic for our clients, particularly those with overseas operations and US or European affiliations. Our clients are seeking to ensure their staff members understand their risks and responsibilities in these areas by providing relevant, regionalized training. The conference on Friday was a great opportunity for our clients to move beyond the law and theory and gain a window into how bribery and corruption happens in the real world.
Q: Thank you, so, to start, what is the current enforcement environment in Australia with respect to anti-corruption laws, and has that changed in recent years? There seems to be a rising tide of news coming out of Australia with respect to anti-bribery enforcement and debate, so perhaps you can describe the environment.
Jane: It’s been an interesting to observe the changes in dialogue that have occurred over the past few years, Richard. Australia has had laws prohibiting the bribery of foreign public officials since 1999. However, it was the introduction of the UK Bribery Act in 2010, rather than any prosecution under Australia’s own law, that really generated much of the discussion and awareness that corporate Australia is experiencing today. In addition, it has attracted the attention of the media, which had little interest prior to 2010. Articles on bribery and corruption now appear regularly in the national press. So, we certainly see an increase in awareness and a lot more discussion about corruption by companies. However, although corporate Australia is now more aware of the potential risks around corruption, many companies remain reluctant to do much about it. This is because, and some senior executives have told me this, they do not believe they will be caught or prosecuted. This may change with the more recent charges brought by the Australian Federal Police.
Julian: We are also seeing that there is a push from organisations to ensure the supplier organisations they work with have solid compliance programs in place by having non-negotiable contract terms requiring that suppliers warrant that they are knowledgeable about Anti-Bribery Laws and that they have not made, offered or authorised any payment or gifts, including facilitation payments.
Further, those suppliers are then required to warrant that they have similar contract terms with their own suppliers. These sorts of contract terms, particularly on very large deals, often form part of the impetus for the development and enhancement of compliance programs in a way that is perhaps more pressing than legislation.
Q: Do you see a focus on individuals, corporations, or both?
Jane: From what I have observed, it has been both. With Securency and Note Printing Australia, both companies were charged as well as individuals who had been executives with each. The prosecutions of the individuals are ongoing. The allegations in the national press have focused on both the corporations and key individuals who were said to be involved in the alleged conduct. More recently charges have been brought against both a Sydney-based construction company – called Lifese – and the 2 directors of that company alleging they had attempted to bribe Iraqi government officials to secure contracts in Iraq.
Julian: The Sydney Morning Herald recently reported that “Some of corporate Australia’s top figures, including former executives from BHP Billiton and Leighton Holdings, are set to be called to a Senate inquiry and grilled about allegations the firms bribed foreign officials.”
In the article Senator Dastyari is quoted as saying:
“This will not be an inquiry simply into Leighton Holdings, but Leighton Holdings serves as a powerful case study for foreign corrupt practices and how the powerful can exploit the system,”
Q: Do you think that the investigatory and prosecutorial resources are sufficient to promote anti-bribery enforcement and compliance? In other words, are the laws “on-the-books” good enough, and if they are, will they be aggressively enforced?
Jane: That’s a good question, Richard. There have been concerns over the years that the law prohibiting the bribery of foreign public officials is inadequate and the elements of that law difficult to satisfy to a prosecution standard. Certainly there have been very few prosecutions under the law; the prosecutions currently before the courts are for aiding and abetting, not for breaching the foreign bribery law. And there also have been concerns as to whether sufficient resources were being dedicated to the Australian Federal Police to investigate foreign bribery crimes and whether the AFP is the appropriate organisation to have responsibility for investigating them.
While some members of the AFP have considerably more expertise and skills in these kinds of investigations now than previously, it is not an area that the AFP traditionally investigates. There has been some discussion as to whether the corporate regulator – the Australian Securities and Investment Commission – is more appropriate but it seems reluctant to get involved in foreign bribery investigations.
Julian: There has also been some criticism of Australian legislation, in particular the exemption of facilitation payments which can be seen as providing a grey area for defense. Elements of corporate Australia have been very vocal about the need to retain this exemption, however the majority of our clients are ignoring it in their training preferring to adhere to a blanket ban on all payments.
Q: Now, what of our video conference. I found it to be a compelling Q and A, not only with Jane, but also with respect to the questions asked by your clients. So pardon my curiosity, but as I shared my own confrontations with corruption, including how I so easily rationalized bribery, do you think those front-line perspectives were already in the “compliance model”, or was there a reflection that perhaps the “rules and procedures” of compliance needed some more calibration as to what could be expected in the field, especially in high risk areas?
Jane: You describing your experience, Richard, gave our clients a ‘heads up’ on the personal cost of engaging in corruption and your personal experience brought home to everyone that there are very real consequences to engaging in corrupt conduct. While some of the clients are very aware of this in a theoretical sense, it is often difficult to grasp what that means in a practical sense. No, in my view, I do not think those “front-line perspectives” are included in most compliance frameworks found in corporate Australia. Those who believe it is important to have a compliance framework (and, as mentioned, there are many Australian companies who remain skeptical) often seek to implement one without giving much thought to the practical context. This can result in a rejection of the framework by those in the field who are most at risk.
Julian: The personalization you brought to the event really cut through. Our clients found your story to be very powerful and something that they will take back and share across their businesses.
Q: Thank you for your time today, is there anything else you would like to add?
Jane: Thank you too, Richard. There is just one thing I’d like to add. As mentioned, various investigations into and allegations of corruption have generated some sensational headlines. That has certainly captured the attention of the media and the public. And related to that is the role of social media. NGOs and others increasingly use social media to monitor and report on the conduct of companies operating overseas. I can only see that gathering momentum over the next few years. It is increasingly difficult for any company to have any secrets any more.
Julian: I was personally pleased that there was solid discussion around the conflict between corporate compliance messages and incentive-based remuneration strategies. This is a topic that I have had a long-held interest in and I was pleased to see legal and compliance people start to recognise that incentive-based remuneration schemes can incentivize inappropriate behaviors. The binary nature of many of these schemes can be difficult to align with wider governance and ethics aspirations. We have seen similar issues in other industries, such as financial planning, where commissions paid by financial institutions to planners have resulted in very unfortunate outcomes for customers.
Where there is a significant negative or positive effect for the employee, which is based on the outcome rather than effort, there will always be incentive to achieve sales to the detriment of other objectives.
Well, thank you again Jane and Julian and I look forward to continuing the conversation.