Australia and New Zealand risk losing their global standing in anti-corruption efforts, according to a new report from Chartered Accountants Australia and New Zealand (CA ANZ).
The organisation is calling for a holistic and sustainable approach to address bribery and corruption in the region.
Corruption is on the rise according to the latest publication by CA ANZ – “Are Australia and New Zealand Corrupt?” with both nations increasingly trading with countries considered to be corrupt.
Research suggests bribery and corruption has increased by upwards of 80 percent and both Australia and New Zealand have fallen in global rankings for transparency and corruption.
CA ANZ CEO Lee White said in a statement that while both Australia and New Zealand have traditionally traded on reputations of honesty and integrity, this reputation is at risk if the issue isn’t addressed, and steps put in place to mitigate the threat.
“We know corruption is on the rise. We need to be proactive and start making the changes required to address this illegal behaviour before it has the chance to destroy our global reputation and restrict our economic growth,” said White. “We don’t need more regulation, but we do need more education around this issue, penalty regimes in place and a proactive and prevention response from Government and business”.
The report suggests legislation alone will not stamp out corruption, but does outline a series of recommendations which could be adopted across Australia and New Zealand.
Recommendations include compulsory anti-bribery and corruption policies in NZX and ASX listing rulings, regulation to prohibit the awarding of public sector contracts for those with past convictions, and a prohibition on rewarding public sector contracts to companies without corruption policies.
“These recommendations, if adopted, could vastly improve the standing of Australia and New Zealand in the global fight against corruption,” Lee said. “It’s hoped this publication and our recommendations will spark serious debate and encourage businesses and policy-makers alike to effect responsible change.”
Recommendations from Chartered Accountants Australia and New Zealand:
1. Increase transparency in awarding public sector contracts
The public sector is particularly vulnerable to accusations of bribery and corruption. Increased transparency can assist – particularly when it comes to the awarding of lucrative contracts. Actions such as disclosing bids once public sector contracts have been awarded will result in greater accountability in the contracting process.
2. No public sector contracts for those with past convictions
Prohibit the awarding of public sector contracts to organisations, individuals, or their affiliates, where they have corruption or fraud convictions. Canada has adopted this approach, which has been discussed more widely for some time, but is yet to receive traction in either Australia or New Zealand.
3. No public sector contracts for companies without corruption policies
Require organisations bidding for public sector contracts to have effective integrity initiatives in place. The OECD provides good practice guidelines in relation to internal controls, ethics and compliance.
4. Increase use of asset confiscation
While there is legislation that allows for asset confiscation in certain circumstances, there has been little visible appetite to follow through with this action. A working group set up by the G20 in 2010 has drawn up rules on seizing corrupt assets (and denying visas to corrupt officials).
5. Encourage AB&C policies and practices in the private sector
The key tools for detecting corruption include control of third parties, frequent compliance audits, forensic data analytics, clear corporate policy and training programs.
6. Rewards for whistle-blowers
We have mechanisms in place to support whistle-blowers when they disclose illegal activity. Should we go further and reward them? Some countries already offer rewards for tax whistle-blowing.
7. Better cross-border cooperation on bribery
The OECD recommends enhancing cross-border cooperation, particularly on foreign bribery investigations and prosecutions. We have already noted the criticism of both Australia and New Zealand for their failure to prosecute foreign bribery.
8. Harsher sanctions, applied more broadly
The OECD notes that “effective enforcement also goes hand in hand with effective, proportionate and dissuasive sanctions; in this regard, the range of sanctions available for foreign bribery in New Zealand may be insufficient.” The UK Bribery Act 2010 is a good example of how harsher sanctions, applied to a broader range of offenders, may assist with reducing corruption. It is also important that where sanctions exist, they are seen to be followed through.
9. Limit tax deductibility of “facilitation payments”
There appears to be a fine line between what is a bribe (illegal) and what is a facilitation payment (legal). The fact that facilitation payments are tax deductible, provided that they are minor and not illegal in the country of receipt, sends the signal that they are acceptable.
10. Require AB&C policies in NZX and ASX listing rulings
Transparency International recommends including bribery and facilitation payment guidance into the NZX Corporate Governance Good Practice Code. This recommendation could also be extended to the ASX Corporate Governance Council. We could go even further and require all listed companies to have AB&C polices. The importance of having a concerted and cohesive effort to address corruption has been widely noted.
