Last year, Australia slipped out of the top 10 (least corrupt) nations in the Corruption Perceptions Index. The report, from global anti-fraud body Transparency International, is a highly anticipated yearly measuring stick for countries worldwide in terms of their anti-fraud measures, vulnerability to corruption and efforts to combat it. To be in the top 10 is a mark of distinction; to be number one (Denmark) is a badge of national pride.
How far out of the top 10 did Australia fall? Not far at all – in fact, it sits at 11 (above Britain, notably, at 14). Recent events, however, have made clear that some Australians are not happy with the status quo. Bribery, in particular, is on the minds of Australian lawyers who are fed up with the country’s ineffective efforts to curb corruption. This according to a recent article from the Australian Broadcasting Corp. (ABC):
The world's leading lawyers have questioned the ability of the Australian Federal Police to investigate serious corporate crime and called for a new "dedicated agency" to have responsibility for complex financial cases, including foreign bribery.
In a damning submission to the Senate, the International Bar Association (IBA) described Australia's foreign bribery laws as ineffective and our record of enforcement "woeful".
So what happened? How has a country that has been considered one of the leaders in the fight against fraud found itself at the center of such a controversy? According to the lawyers, it is a combination of factors that is holding Australia back:
- In 15 years, there have been 28 bribery investigations; 21 of them were dropped and only two led to criminal prosecutions
- Unlike the U.S., Australia has no liability on parent companies for the conduct of subsidiaries or intermediaries.
- A bribery and corruption survey from Deloitte found 23 percent of Australian organizations with offshore operations are not concerned about the risks arising from non-compliance with bribery laws; about 77 per cent have also never conducted a bribery risk assessment.
Most of the criticism from the International Bar Association (IBA) is leveled at the Australian Federal Police, and the lawyers argue that there should be a new, dedicated agency with responsibility for investigating such crimes.
One of the issues called out by the IBA is how Australia approaches the issue of so-called “facilitation payments.” To some anti-fraud professionals, “facilitation payment” is a clever term for a bribe. But presently, these small cash payments are still legal under Australian law.
The IBA wants to see civil and criminal penalties for engaging in such practices. However, Australian companies who support this tactic, also referred to as “grease payments,” can point to the U.S. as another country that allows such payments – again, in small amounts, and only to facilitate “routine government action” that the official is already duty bound to perform.
For countries in the UK, however, facilitation payments are illegal – a point noted by the IBA in its criticism of the Australian stance.
The newest Corruption Perceptions Index doesn’t come out for a few months. It seems likely, however, that many in Australia will be intent on finding out where Australia sits in the hierarchy of combating fraud. If the country slides past, say, Britain – moving the wrong way on the list – one might expect more criticism of the kind voiced by the country’s lawyers.