Andrew Murray (WA, Australian Democrats) Share this | Link to this | Hansard source

During April this year I attended the World Ethics Conference in Oxford, England, which was an invigorating experience. The conference addressed the challenge of leadership ethics and integrity in public life. Embedded corrupt networks and cultures are very resilient. For corruption to be minimised and for ethics in public life to become embedded requires leadership, and leaders motivated by and trained in ethical conduct. Such leaders need support. In the absence of such leaders, international standards, laws and norms provide assistance in combating corruption, but without leadership and the resources and independence for monitoring and enforcement, it is hard to make progress on corruption and ethical conduct in both countries and organisations.

It will take me time to summarise the reports and information I gathered from the conference, so I will expand on the information in later work in the Senate. Today, I will focus, among other things, on the United Nations Convention against Corruption, which Australia signed in 2003 and ratified—at the last possible moment, I might add—in December 2005 and which came into force in January 2006. I will also deal with some aspects of the papers that were presented to the conference by various eminent speakers and relate these to matters which are very relevant here in Australia.

The purpose of the United Nations Convention against Corruption is, among other things, to promote integrity, accountability and proper management of public affairs and public property. Further, chapter II, article 5, states:

1. Each State Party shall, in accordance with the fundamental principles of its legal system, develop and implement or maintain effective, coordinated anticorruption policies that promote the participation of society and reflect the principles of the rule of law, proper management of public affairs and public property, integrity, transparency and accountability.

One would hope that Australia, as a signatory to the United Nations Convention against Corruption, would become an active player in the fight against international corruption. Many of the aspects of the UNCAC are covered by Australian domestic legislation, including prohibiting the bribery of national public officials—which is covered by the Criminal Code Amendment (Bribery of Foreign Public Officials) Act—and matters relating to money laundering, another matter on which Australia has been dragging its feet but might eventually produce legislation.

However, although Australia has adopted many of the recommendations of the United Nations conventions, there are still troubling areas, particularly in terms of enforcement and where the spirit of conventions is not embraced. The current investigation into the actions of the AWB in relation to wheat exports to Iraq and India would seem to call into question whether Australia takes its obligations under the UNCAC and the OECD’s anti-bribery convention as seriously as it should. We live in a global economy, so we conduct business on an international scale. The way in which we conduct that business has ethical implications and reputational implications, not only for Australia and Australian businesses but also for the countries and businesses in those countries with which we do business.

In my home state of Western Australia there is considerable exploration for resources. This exploration is conducted by multiparty ventures with transnational corporations from around the world. Many of these companies in joint venture arrangements also conduct exploration and business overseas. It is to be hoped that they conduct their business, wherever they do it, by the codes of conduct set out in the OECD and United Nations conventions. It is also to be hoped that the government applies those conventions and ensures that companies trading overseas do exactly that.

I was once told that the difference between the First World and the Third World is that the First World is efficiently corrupt. You only have to hear and read, including in our media, the alarming popular defence of corruption—that it the only way to do business overseas—to realise that ethics have a long way to go in Australia. And you can be sure someone who will bribe and cheat overseas will bribe and cheat in Australia too if they get the chance.

Several of the speakers at the conference referred to the corruption of the United Nations oil for food program in Iraq. As Dr Rosamund Thomas, Director of the Centre for Business and Public Sector Ethics in Cambridge, pointed out, the Volcker inquiry implicated more than 2,000 companies from 66 countries in illicit payments. AWB might say, therefore, that it is in plenty of company, being one of 2,000 companies from 66 countries, but the scale of AWB’s payments into Iraq have raised eyebrows all over the world. Dr Thomas pointed out that $US1.8 billion in illicit surcharges and kickbacks were diverted by Saddam Hussein’s regime from the humanitarian program that the UN had attempted to set up under the oil for food program.

I cannot pre-empt the findings of the Cole commission into the AWB, but it is not difficult to see that AWB was and is part of the problem, and is not part of the solution. It seems apparent from evidence before the Cole commission that AWB made many questionable payments. The question being considered by Commissioner Cole is whether these were facilitation payments, which could be regarded as lawful, or whether they were bribes, which could be regarded as unlawful—or whether they were both.

Under Australian law it is a complete defence if the benefit given is of a minor nature or is to expedite or secure the performance of a routine government action. This is generically known as the facilitation payment defence. It would also assist the defence of any charge if the payments were fully disclosed to auditors and relevant regulators, and proof could be provided of that. In the report on Australia’s implementation of the OECD anti-bribery convention it was recommended that the government:

... carry out the undertaking to revise the existing publicly available guidance document on the foreign bribery offence as soon as possible to clarify the defence of facilitation payments.

I for one am hoping that this revision is well under way. It is not sufficient for Australia to simply be a signatory to conventions of this nature. It must lead the way if it is to be a leader in ensuring that the rule of law and integrity in public and business life prevail with respect to our own companies and our own country’s actions.

The OECD also sought clarification from Australia:

... that the foreign bribery offence applies regardless of the results of the conduct or the alleged necessity of the payment.

Such an obfuscatory approach in Australia’s legislative drafting is odious to the spirit of the anti-bribery convention and the UN Convention against Corruption. The whole point of these conventions is to try to stop corrupt behaviour in all countries, and especially in those countries where it has become an ingrained habit or an acceptable way to get business done. If Australia and similar nations are not willing to show the way on these matters it is difficult to see how the spirit of the UN or OECD conventions can be properly implemented. The fact that there is an easy defence under Australian law regarding facilitation payments does make a mockery of what the OECD is trying to achieve.

I note that since I attended the ethics conference further questions have been raised about the actions of AWB regarding a payment of $3.3 million to a Cayman Island tax haven as part of a wheat sale to India. The whole point of the United Nations and OECD conventions is so that corruption at a global level can be tackled with cooperation between nation states with the same objective—to stamp out corruption in business dealings. With these kinds of examples you get the feeling that Australia has laws which give the appearance of supporting the United Nations’ position but in effect have a ‘nudge, nudge, wink, wink’ attitude to corrupt officials and business interests. That may be profoundly unfair but that is the impression that is circulating in many circles.

I know the Prime Minister has said that the government has done its job in relation to the AWB by setting up the Cole inquiry, but it is just not sufficient if the law is not able to be used to satisfy the outcomes of that inquiry. The inquiry was set up in the full knowledge that gross shortcomings in Australian law, with respect to bribery in this area, actually make it hard to prosecute anyone successfully, so that something that appears to be an open and transparent accountability inquiry process to the Australian people will turn into something weak when it is before the courts.

Corruption is an insidious thing. It corrupts those who pay the money or advantage and those who receive it. It corrupts the politicians, directors and people who condone it. It undermines integrity and the rule of law. It is defined as ‘the spoiling of anything by taint or disintegration’. This scandal has tainted the reputations of the directors of the AWB. Hopefully it will bring about the dismantling of that entity. Much worse is that the scandal has tainted Australia’s international trading reputation in the long term. It has also put our wheat farmers’ ability to export their quality product in jeopardy. Further, it means that Australia’s taxpayers have had to pick up the tab. Ian Wishart from Plan Australia pointed out in an article in the Age on 29 May 2006 that $357 million in aid is going to Iraq. He goes further to say that $334 million of that is going to pay off Iraq’s bilateral debt to Australia—a round robin arrangement in other words.

This debt came about because of the actions of AWB in making sales to Iraq which we now know involved facilitation payments or bribes—we will see which one Mr Cole says they were. The government was guarantor of these sales through the Export Finance and Insurance Corporation and, when the Iraq regime did not pay up, the Australian taxpayer footed the debt bill.

According to the Transparency International corruption perceptions index 2005, Australia is still within the top 10, coming in at No. 9, which, incidentally, is about where it was 10 years ago. But we are still well beaten by other OECD countries, including New Zealand and the Scandinavians. However, in light of the OECD recommendations of how Australia could amend its laws to more appropriately reflect the spirit of the OECD anti-bribery convention, in light of the expected findings of the Cole inquiry and in light of the scandal itself, I think the idea that Australia can retain this position would not be certain.

It is time for the government to respond to the OECD report on the Australian implementation of the anti-bribery convention with some speed and agility, and to domestically implement all the outstanding matters covered by the UNAC to ensure its standing in a global economy. This is a government that can move immigration laws to interfere with or try and intersect court proceedings that might be under way at this time and yet cannot do the same with respect to this issue. It is essential that the domestic legislation addresses those matters in the private sector and the public sector. Increasingly, major international business is not conducted between state entities or instrumentalities of the states. Most Western democracies in recent years have been offloading most of their utilities, like energy and water, into the private sector, so it seems next to useless to have legislation which only targets the public sector.

I concede that the UNAC only encourages states to do this but, in the context of the global economy and of Australia taking a lead in these matters rather than succumbing to the tainted business practices of some of the countries with which it does business, it would be appropriate to introduce legislation to ensure that Australia fully supports both the spirit and the letter of these conventions with respect not just to the law but to the enforcement of the law.

On 27 March 2006, I asked five questions of the Minister for Justice and Customs, Senator Chris Ellison. I asked those questions with reference to a report by the Centre for Australian Ethical Research released in March 2006 entitled Just how business is done? A review of Australian business’ approach to bribery and corruption. In answers to those questions, Senator Ellison indicated that, because of those questions and because of other pressures elsewhere, the government was moving to take action with respect to these matters. In his answer, he said:

This Government is committed to combating all forms of corruption, including foreign bribery. Foreign bribery was not an offence until 1999, when this Government introduced amendments to the Criminal Code.

The offence is punishable by up to 10 years imprisonment and/or a fine of up to $330,000.

It is good to see that Justice Minister Chris Ellison has put the top 100 companies on notice about bribery matters, as per the answers to those questions. I concede that most companies in Australia probably do conduct themselves to the highest possible standards, but it takes little imagination to see the damage that allegations against a major government backed company like AWB can have, and this impacts on all Australian companies doing business overseas. If it is considered that you can pay off one Australian company then everyone doing business is going to be confronted with the prospect of being expected to offer a bribe or being asked to launder money or to facilitate something above and beyond the contractual arrangements being negotiated. As I said earlier, corruption taints both the giver and the receiver. If Australian officials and Australian companies do not uphold the United Nations convention, and simply succumb to what these officials and companies perceive— (Time expired)