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Dean Newlan -  McGrathNicol - UNAA Business Integrity Seminar 27.02.13
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Dean Newlan - McGrathNicol - UNAA Business Integrity Seminar 27.02.13

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Dean Newlan (Partner, McGrathNicol) - Presentation at the United Nations Association of Australia (Victorian Division) Corporate Sustainability Leadership Seminar ‘Building Business Integrity, …

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/

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  • 1. FORENSIC Corporate Sustainability Leadership SeminarBuilding 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” 18