Dean Newlan (Partner, McGrathNicol) - Presentation at the United Nations Association of Australia (Victorian Division) Corporate Sustainability Leadership Seminar ‘Building Business Integrity, Preventing Corruption’ held on Wednesday 27 February 2013, in partnership with ANZ. The seminar explored some of the key issues facing Australian businesses operating in high-risk environments and provide examples of how different companies have addressed these challenges through anti-corruption programs and transparency mechanisms. Guest Speakers included: • Michael Ahrens (Executive Director, Transparency International Australia) • Neville Tiffen (Global Head of Compliance, Rio Tinto) • Mathew Bastianon (Manager, Anti-Money Laundering, Bribery and Corruption, ANZ) • Dean Newlan (Partner, McgrathNicol and Former Chair of Standards Australia’s Fraud and Corruption Control Standard and Whistleblower Protection Standard Working Parties). • Rachel Nicolson (Director, UN Global Compact Networks Australia and Senior Associate, Allens) Facilitator: • Rosemary Sainty (Adviser, Corporate Engagement, Transparency International Australia and Former Head, Secretariat, UN Global Compact Network Australia) The panel discussion addressed: • Implementing corporate anti-corruption programs: challenges and opportunities; • Key issues for the extractive industry, financial and professional services, and SMEs; • Opportunities for collective action, sectoral initiatives and engaging suppliers and business partners; • Beyond compliance: building business integrity and transparency; • Transparency International’s Business Principles for Countering Bribery: revision and update, and 2012 report on Transparency in Corporate Reporting; • UN Convention Against Corruption; • UN Global Compact Principal 10 on Anti-Corruption; and the • B20 Task Force on Improving Transparency and Anti-Corruption. More information available at: http://www.unaavictoria.org.au/education-advocacy/masterclasses/building-business-integrity-preventing-corruption-seminar/

1. FORENSIC
Corporate Sustainability Leadership Seminar
Building Business Integrity, Preventing Corruption
27 February 2013
Dean Newlan
Partner

2. Bribery and Corruption – the state of the nation
1. Few prosecutions launched since the introduction of the foreign bribery
provisions of the Criminal Code Act in 1999 – Australia criticised for lack of
prosecutions by the OECD (October 2012)
2. Emphasis on ‘official corruption’ – no Federal law dealing with the private
transactions (but would breach local law where the corruption occurred)
3. Facilitation payments still permitted under Australian law
4. Australia performed poorly on the Bribe Payers Index throughout the first
decade of C21 (but improved position in the 2012 BPI)
5. More concern about complying with US FCPA and the UK Bribery Act than with
the local equivalent
6. A sense that one really cannot do business in ‘those places’ unless you play by
local rules – the question is how to do that but at the same time ‘comply’ and be
seen to comply
1

3. The global bribery and corruption landscape
Changing regulatory landscape States Act
United
Foreign Corrupt Practice
Australia
Bribery of Foreign Public Officials
United Kingdom
UK Bribery Act
(1977) (1995) (2011)
Bribery of foreign public
officials covered? Yes Yes Yes
Private-to-private bribery
covered? No No Yes
Receipt of a bribe covered? No No Yes
Proof of intent required? No Yes Mixed
Facilitation payments
permitted? Yes Yes No
Is failure to prevent bribery
an offence? No No Yes
Criminal penalties – Up to US$250,000 per violation and 10,000 penalty units*, 10 year sentence Up to 10 year sentence and
individuals sentence for up to 5 years or both unlimited fines
100,000 penalty units*, 3 times the
Criminal penalties –
Up to US$2,000,000 value of the benefit or 10% of the Unlimited fines
companies turnover
Source: ICAA/PwC, Foreign bribery and corruption: The facts, the risks, and the ways to help protect your organisation
2

4. “The issue is not that companies are necessarily behaving as
badly as AWB – it is more a case of sharp practice losing its
ability to disturb us.”
Tony Sutcliffe – Australian Financial Review
Following release of the report of the Cole Commission
3

5. Bribery and corruption – distinguishing two perpetrator types
Perpetrator Perpetrator
as as agent
beneficiary for another
4

6. Business people who do the ‘wrong thing’ for the ‘right reason’
Changing Business Regulatory
Conditions Scrutiny
Perpetrator
Market Increasing
Expectation
as Competition
beneficiary
Shareholder
Perpetrator
Financier
Expectation as agent Expectation
for another
5

7. Rationalising and normalising corruption as agent
6

8. Rationalising and normalising corruption as agent
“We can’t compete in that
market if we don’t do
business this way!”
7

9. Rationalising and normalising corruption as agent
“We can’t compete in that
market if we don’t do
business this way!”
“We can appoint a ‘go-
between’ – that way
we can comply with
the legal requirements
but still do business!”
8

10. Rationalising and normalising corruption as agent
“We can’t compete in that
market if we don’t do
business this way!”
“It’s okay
because
everyone else is
doing it!”
“We can appoint a ‘go-
between’ – that way
we can comply with
the legal requirements
but still do business!”
9

11. Rationalising and normalising corruption as agent
“We can’t compete in that
market if we don’t do
business this way!”
“It’s okay
because
everyone else is
doing it!” “That’s the way it
has always been
done in that
culture!”
“We can appoint a ‘go-
between’ – that way
we can comply with
the legal requirements
but still do business!”
10

12. Rationalising and normalising corruption as agent
“We can’t compete in that
market if we don’t do
business this way!”
“It’s okay
because
everyone else is
doing it!” “That’s the way it
has always been
done in that
culture!”
“This is the right
thing to do for
our
shareholders.”
“We can appoint a ‘go-
between’ – that way
we can comply with
the legal requirements
but still do business!”
11

13. Rationalising and normalising corruption as agent
“We can’t compete in that
market if we don’t do
business this way!”
“It’s okay
because
everyone else is
doing it!” “That’s the way it
has always been
done in that
culture!”
“This is the right
thing to do for
our
“The customer
shareholders.”
still paid the
lowest price -
where’s the
harm?”
“We can appoint a ‘go-
between’ – that way
we can comply with
the legal requirements
but still do business!”
12

14. Rationalising and normalising corruption as agent
“If we don’t do this, we
“We can’t compete in that are actually failing in
market if we don’t do our duty to act in the
business this way!” best interests of the
“It’s okay company!”
because
everyone else is
doing it!” “That’s the way it
has always been
done in that
culture!”
“This is the right
thing to do for
our
“The customer
shareholders.”
still paid the
lowest price -
where’s the
harm?”
“We can appoint a ‘go-
between’ – that way
we can comply with
the legal requirements
but still do business!”
13

15. Rationalising and normalising corruption as agent
“If we don’t do this, we
“We can’t compete in that are actually failing in
market if we don’t do our duty to act in the
business this way!” best interests of the
“It’s okay company!”
because
everyone else is
doing it!” “That’s the way it
has always been
done in that
culture!”
“This is the right
thing to do for
our
“The customer
shareholders.”
still paid the
lowest price -
where’s the
harm?”
“We can appoint a ‘go-
“If I am doing
between’ – that way
this it can’t be
we can comply with
wrong – I don’t
the legal requirements
do the wrong
but still do business!”
thing!”
14

16. Fraud and Corruption Control – AS 8001-2008
Source : Standards Australia
15

17. Fraud and Corruption Control – AS 8001-2008
Source : Standards Australia
16

18. AS 8001-2008 Anti-corruption guidelines
Strong Anti-
corruption
statement
Business Principles Personnel rotation
for Countering Bribery
Open channels of Audit of vendors
communication and high-risk
(external) providers
Open channels of Enhanced probity
communication and contracting
(internal) procedures
17

19. And finally – business can help to control corruption risk by:
“Empowering the
independent director”
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