Peter Whish-Wilson (Tasmania, Australian Greens) Share this | Hansard source

) ( ): by leave—I move Greens amendments (1) and (2) on sheet 7845 together:

(1) Page 2, clause 2 (table item 2), omit the table item, substitute:

(2) Page 12 (after line 22), after Schedule 2, insert:

Schedule 2A—Amendments relating to the Corporations Act 2001

Corporations Act 2001

1 Section 9 (after paragraph (a) of the definition of financial records )

  Insert:

  (ab) books, records or accounts needed to explain details of transactions that deal with assets; and

2 After section 190B

  Insert:

190C Internal accounting controls

(1) A director of a corporation must ensure that the corporation has a system of internal accounting controls.

(2) To comply with subsection (1), the system must ensure that:

  (a) transactions are executed in accordance with appropriate authorisation; and

  (b) transactions are recorded; and

(c) assets of the corporation are regularly accounted for and reconciled; and

  (d) appropriate authorisations are in place in relation to dealing with assets of the corporation.

3 Paragraph 286(1)(a)

  Repeal the paragraph, substitute:

  (a) correctly record and explain its financial position and performance; and

  (ab) correctly record and explain its transactions in sufficient detail so that the record accurately reflects the transactions; and

4 Application provisions

  The amendments made by items 1 and 3 of this Schedule apply to transactions that occur on or after the commencement of this Schedule.

I will not take very long, but I want to spend a few minutes going through why we have put up some amendments to schedule 2, which deals with false-accounting offences. The Greens are supportive of the intention of schedule 2 as it exists. Schedule 2 purports to strengthen the law in relation to the falsification of accounts so as to better enable regulators to prosecute those involved in bribery and corruption. It responds to the evaluation of Australia's compliance with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, which recommended that sanctions for false accounting be strengthened.

Bribery and corruption are obviously threats to the foundation of our society wherever they occur. They erode confidence in the operation of our economy, they undermine trust in the institutions that support our economy and they pick away at the foundations of society. Corporations involved in bribery and corruption are a threat to the rule of law, pure and simple. I do not think anybody in here would disagree with that. Governments have an obligation to stamp out bribery and corruption wherever they take place. Failing to do so sends the wrong message about what is acceptable conduct. With supply chains being increasingly globalised, it is important that Australia do all that it can to encourage higher standards of conduct.

Unfortunately, as it stands, the Greens do not believe that schedule 2 spells out clearly enough the duties of a corporation that would enable this law to be effective. The concern that arose during the inquiry of the Legal and Constitutional Affairs Legislation Committee is that the Corporations Act does not actually require enough detail to be recorded that would enable regulators to detect and prosecute fraudulent accounts. The Greens amendments would simply require a corporation to record the buying and selling of assets. This is a statement of the obvious. Any legitimate business will already have such a system in place; otherwise, how else would it stay afloat? It is essential to the profitability of an enterprise to know what you are buying and what you are selling and that you have a system for employers to do this on behalf of the enterprise. The only businesses that do not keep a record of these transactions—at least not an official record—are those engaged in corrupt activities. But, for regulators to be able to detect bribery and to detect corruption, they need to be able to look at these records to see if the books add up.

The shortcoming of the bill as it stands, in our opinion, is that it assumes that the existing provisions of the Corporations Act require these records to be kept. Section 286 requires a corporation to keep financial records. However, the definition of financial records does not expressly state that the transaction of assets should be recorded. The Greens amendments would clear this up by prescribing that the transaction of assets be recorded. The Greens amendments would also make it explicit that directors of a corporation must institute and maintain a system to record these transactions. The Greens amendments sit entirely within the existing framework of the Corporations Act. They do not seek to extend the coverage of the act or the time period for the keeping of records, and we have received legal advice that this is the case.

The Greens amendments actually seek to mimic the approach taken in the United States, which, on this occasion, is leading Australia in taking steps to stamp out bribery and corruption. No law-abiding business has anything to fear from these amendments. As I mentioned earlier, most businesses do record these transactions, but you would have to ask yourself, if a business is not recording these simple transactions, what actual business is it conducting?

I urge senators to support these amendments so that we can be sure that the intention of schedule 2 of the bill can be fulfilled. I commend these amendments to the chamber.