Corruption and bribery: are you at risk?


With corruption and fraud in the spotlight it’s a good time to review your organisation’s policies.

Glance at the Australian newspapers over the past few months and you could be forgiven for thinking we have much in common with countries where fraud and corruption are known to be rife.

The anti-corruption commissions in New South Wales and Victoria are both running major cases. Nationally, there’s the Royal Commission into trade union corruption and new Commonwealth whistleblower laws are each month attracting more than 100 allegations of crime, corruption or serious incompetence by Commonwealth government officials,

Australia is “under pressure” to step up enforcement of Australia’s fraud and corruption laws, says KPMG’s partner in charge of forensic, Gary Gill. “There are a number of matters the AFP is investigating.”

Globally, action against fraud and corruption has ramped up over the past few years too. The United States has spearheaded the campaign with a dramatic increase in prosecutions against those breaching its Foreign Corrupt Practices Act. The United Kingdom introduced similar laws in 2011.

Australian businesses can fall foul of the laws even when there’s no apparent connection, says Gill.

“In the US, for example, they will often take the most aggressive approach even if you’re not operating in the US. If there’s any link – if the transactions are in US dollars, the US postal system is used, or there’s email traffic going through the US – they’ll say, ‘You’re fair game, you’re within our jurisdiction’.”

Critical risk management

The intense law enforcement activity, along with the potential risk to reputation and brand, means that comprehensive anti-fraud and corruption policies and procedures are crucial for all organisations.

Australian energy producer Santos, which has operations in Indonesia and Singapore and offices in India, Bangladesh and Vietnam, sets the UK legislation as its benchmark. It’s “a bit more stringent” than Australia’s own anti-corruption laws says chief human resources officer Petrina Coventry (FCPHR).

Santos has a code of conduct to deter unethical and illegal behaviour by employees. Its suite of policies cover anti-corruption, gifts and benefits, conflicts of interest, government engagement and political donations. Online training in the code must be completed every year by all employees, as well as some relevant contractors and suppliers, and the code of conduct is referred to in employment contracts.

The company has set up its own whistleblower hotline, independently run by Deloitte, along with an internal whistleblower hotline, says Coventry, both of which are “heavily used.”

Experienced corporate governance specialist Geoff De Lacy (FAHRILife), who’s held roles in major companies and multinationals in both Australia and Asia, has many stories of the challenges of managing fraud and corruption.

There was the 29-year-old employee of a major accounting organisation in Indonesia sent out to audit the books at a mine. The boss told him he had two choices when it came to presenting his report and opened one desk drawer stuffed with cash and then another, which contained a gun. The auditor, newly married with a pregnant wife, decided to hand in a report that “essentially said nothing”, says De Lacy. Arriving home that evening, the auditor found a new car parked in his driveway, registered to him.

De Lacy mentions another case concerning an Australian manufacturer with a plant in China. When the Australian manager unexpectedly returned to his office late one evening, he found the plant in full production. A rogue team was running a third shift using the company’s raw materials and machinery.

“These are extreme examples but any degree of fraud and corruption is very serious. It can only be dealt with by good training, clearly-stated corporate values and exposure to experienced people, those who’ve seen what can happen,” says De Lacy.

CEO of Transparency International Australia Michael Ahrens, agrees that a robust compliance program is essential for organisations. It should be endorsed from the top down and supported by training and regular auditing, he says.

“And the staff should be encouraged to feel proud that they have operated in a clean way. That may mean organisations have to opt out of certain projects where corruption is rife,” says Ahrens.

Steps to creating a strong anti-corruption policy

Policies and procedures against fraud and corruption are necessary to help protect any organisation, no matter the size or the market.

Santos chief human resources officer, Petrina Coventry, who’s worked for a number of major multinationals in several industry sectors, gives her tips:

  1. Don’t reinvent the wheel. Google any major company and you’ll find their policies.
  2. Don’t get caught in the debate about what’s a facilitation payment. Take the high road and look at what is best practice around the world.
  3. Good reporting is important. That means, for example, keeping a neat and tidy gifts and benefits register, and keeping track of government meetings that might be meaningful, such as a business deal or partnership.

 

This article is an edited version. The full article was first published in the October 14 issue of HRMonthly magazine as ‘Are you at risk?’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.

 

Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
More on HRM

Corruption and bribery: are you at risk?


With corruption and fraud in the spotlight it’s a good time to review your organisation’s policies.

Glance at the Australian newspapers over the past few months and you could be forgiven for thinking we have much in common with countries where fraud and corruption are known to be rife.

The anti-corruption commissions in New South Wales and Victoria are both running major cases. Nationally, there’s the Royal Commission into trade union corruption and new Commonwealth whistleblower laws are each month attracting more than 100 allegations of crime, corruption or serious incompetence by Commonwealth government officials,

Australia is “under pressure” to step up enforcement of Australia’s fraud and corruption laws, says KPMG’s partner in charge of forensic, Gary Gill. “There are a number of matters the AFP is investigating.”

Globally, action against fraud and corruption has ramped up over the past few years too. The United States has spearheaded the campaign with a dramatic increase in prosecutions against those breaching its Foreign Corrupt Practices Act. The United Kingdom introduced similar laws in 2011.

Australian businesses can fall foul of the laws even when there’s no apparent connection, says Gill.

“In the US, for example, they will often take the most aggressive approach even if you’re not operating in the US. If there’s any link – if the transactions are in US dollars, the US postal system is used, or there’s email traffic going through the US – they’ll say, ‘You’re fair game, you’re within our jurisdiction’.”

Critical risk management

The intense law enforcement activity, along with the potential risk to reputation and brand, means that comprehensive anti-fraud and corruption policies and procedures are crucial for all organisations.

Australian energy producer Santos, which has operations in Indonesia and Singapore and offices in India, Bangladesh and Vietnam, sets the UK legislation as its benchmark. It’s “a bit more stringent” than Australia’s own anti-corruption laws says chief human resources officer Petrina Coventry (FCPHR).

Santos has a code of conduct to deter unethical and illegal behaviour by employees. Its suite of policies cover anti-corruption, gifts and benefits, conflicts of interest, government engagement and political donations. Online training in the code must be completed every year by all employees, as well as some relevant contractors and suppliers, and the code of conduct is referred to in employment contracts.

The company has set up its own whistleblower hotline, independently run by Deloitte, along with an internal whistleblower hotline, says Coventry, both of which are “heavily used.”

Experienced corporate governance specialist Geoff De Lacy (FAHRILife), who’s held roles in major companies and multinationals in both Australia and Asia, has many stories of the challenges of managing fraud and corruption.

There was the 29-year-old employee of a major accounting organisation in Indonesia sent out to audit the books at a mine. The boss told him he had two choices when it came to presenting his report and opened one desk drawer stuffed with cash and then another, which contained a gun. The auditor, newly married with a pregnant wife, decided to hand in a report that “essentially said nothing”, says De Lacy. Arriving home that evening, the auditor found a new car parked in his driveway, registered to him.

De Lacy mentions another case concerning an Australian manufacturer with a plant in China. When the Australian manager unexpectedly returned to his office late one evening, he found the plant in full production. A rogue team was running a third shift using the company’s raw materials and machinery.

“These are extreme examples but any degree of fraud and corruption is very serious. It can only be dealt with by good training, clearly-stated corporate values and exposure to experienced people, those who’ve seen what can happen,” says De Lacy.

CEO of Transparency International Australia Michael Ahrens, agrees that a robust compliance program is essential for organisations. It should be endorsed from the top down and supported by training and regular auditing, he says.

“And the staff should be encouraged to feel proud that they have operated in a clean way. That may mean organisations have to opt out of certain projects where corruption is rife,” says Ahrens.

Steps to creating a strong anti-corruption policy

Policies and procedures against fraud and corruption are necessary to help protect any organisation, no matter the size or the market.

Santos chief human resources officer, Petrina Coventry, who’s worked for a number of major multinationals in several industry sectors, gives her tips:

  1. Don’t reinvent the wheel. Google any major company and you’ll find their policies.
  2. Don’t get caught in the debate about what’s a facilitation payment. Take the high road and look at what is best practice around the world.
  3. Good reporting is important. That means, for example, keeping a neat and tidy gifts and benefits register, and keeping track of government meetings that might be meaningful, such as a business deal or partnership.

 

This article is an edited version. The full article was first published in the October 14 issue of HRMonthly magazine as ‘Are you at risk?’. AHRI members receive HRMonthly 11 times per year as part of their membership. Find out more about AHRI membership here.

 

Leave a reply

avatar
100000
  Subscribe to receive comments  
Notify me of
More on HRM