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What is corruption?
What is corruption?
Transparency International defines corruption as the misuse of public power for private benefit.
What is bribery?
A form of corruption, the bribery of foreign public officials is the voluntary giving (promising or offering) of something of value to a foreign public official in order to obtain or retain business or other improper advantage in the conduct of international business.
What is a foreign official?
Includes employees, contractors and officials of foreign government bodies, employees and officers of state owned corporations, intermediaries of foreign public officials, employees of public international organisations, persons performing duties of an office under a law of that country (i.e. a judge) or any person servicing a foreign government body (i.e. a police officer or security guard).
What is a facilitation payment?
A facilitation payment is a payment intended to expedite or secure the performance of a routine government action. Under Australia's current foreign bribery laws, it is a defence if the payment was a facilitation payment.
Facilitation payments may be made if the:
• Value of the payment was of a minor nature;
• The purpose of the payment was to expedite or secure a routine government action; and
• Payment was recorded.
Facilitation payments are now prohibited under the new UK Bribery Act (2010) but are currently permissible under the FCPA and Australian legislation.
What should you, as an exporter, be doing to protect yourself, your employees and your reputation
Bribery and corruption has the potential to adversely impact an organisation and regulatory investigations can be onerous in terms of both time and money. The best solution is to minimise the chances of it happening in the first place.
“Bribery and corruption has a direct impact on the ability of honest businessmen and women to export and to make their living. The [UK Bribery Act] guidance that is already available should reassure companies that the prevention of bribery is commonsense and does not require unduly expensive or onerous procedures for legitimate businesses.” - Kenneth Clarke, UK Justice Secretary
The UK Ministry of Justice has published guidance in relation to the ‘adequate procedures’ that can be put in place to reduce the risk of bribery and corruption. Businesses that can demonstrate they had adequate procedures in place to combat bribery and corruption will be able to utilise this as a defence in any actions brought against them under the Act.
The procedures are based on six basic principles:
• Monitoring and review
• Proportionate procedures
• Top level commitment
• Risk assessment
• Due diligence; and
The UK Ministry of Justice has issued its guidance and reiterated the point that the action your business needs to take should be proportionate to the risks you face and to the size of your business. An exporter whose turnover is greater than $25million a year and who exports to high bribery risk jurisdictions will have very different ‘adequate procedures in the eyes of a regulator to a first-year exporter hoping to reach turnover of $1million through its supply of products to the New Zealand market.
Obtain legal advice – Where possible, your legal advisors should liaise with the regulator on your behalf and provide advice to ensure that the scope of the request is understood, legal professional privilege is maintained and to ensure that you fully comply with the request. Where a request is excessively onerous, legal advisors may be able to negotiate with the regulator on your behalf to narrow the scope of the request or to arrange an extension of time.
For further information on how to manage Bribery and Corruption please refer to the 20th Edition of the Australian Export Handbook, published by the Australian Institute of Export as this covers the topic in more detail and with a step by step guide to develop procedures for your organisation. Alternatively, the Australian Institute of Export’s short courses in both importing and exporting cover this topic.
Content provided by McGrathNicol. For legal advice in this field, please contact McGrathNicol an independent boutique advisory firm specialising in Corporate Advisory, Forensic, Transaction Services and Corporate Recovery: www.mcgrathnicol.com