Crack down on corporate corruption

NEARLY half of the companies operating in high-risk offshore jurisdictions such as Africa have never conducted a corruption risk assessment, a financial advisory and risk management firm has revealed, which is a growing concern as Australian federal police tighten the belt on bribery and corruption.
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The Deloitte Bribery and Corruption Australia and New Zealand survey highlighted that exposure to bribery and corruption had not traditionally been high on the risk agenda for Western Australian organisations, but this needed to change.

Of the 400 organisations involved in the survey, Deloitte said they were either not recognising the risks or not addressing them.

Respondents with operations and assets in Africa have experienced more instances of fraud and corruption as a group and ranked the risk of corruption as greater concern than respondents not involved in Africa.

Deloitte WA forensic partner Martin Langridge said the landscape surrounding bribery and corruption was shifting.

"If we look at West Australian companies, many are looking for growth and new business opportunities offshore in jurisdictions such as Africa," he said.

"Engaging in corrupt behaviour in high risk countries, because it is seen as the way business is done, will no longer be tolerated as an excuse.

"Ignorance and inactivity are no longer a defence, and failure to act exposes directors, senior executives and employees to increasingly serious sanctions."

Langridge also shone light on companies' use of agents or representatives in other countries which can pose a risk as they are responsible for the actions of agents.

Deloitte revealed only 25% of organisations with offshore operations had a comprehensive understanding of anti-bribery and corruption legislation while 40% of respondents said they were not concerned with risks from non-compliance.

A third of the respondents had operations in high risk jurisdictions, yet 48% of these had never conducted a corruption risk assessment and 21% did not discuss corruption risk at board level.

This was a concern as Deloitte warned the Australian Federal Police had increased its enforcement focus on identifying and investigating illegal activities involving Australian organisations.

Deloitte forensic partner New South Wales Frank O'Toole said as a consequence, the awareness of risks and how to manage them had become more important than ever before.

"Managing this risk goes beyond just internal controls," O'Toole said.

"An ethical culture mitigates the risk of a legislation breach.

"Yet our survey results indicate that organisations are encountering bribery and corruption incidents and challenges which many are ill-equipped to identify, manage and, most importantly, prevent."