Facilitation Payment Abolishment in Australia

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Introduction

Any country understands that business should be conducted in an ethical manner where the issue of corruption should not be heard at all. Therefore, the prosecution of those people and companies that engage themselves in unethical practices should be the option to curb this behavior. To improve the investment by the Australian company and her international image, the aspect of corruption needs to be dealt with amicably since it has been on the increase¹.

However, doing business abroad usually requires the payment of a certain amount of money. This minor sum of money is meant to secure certain government services. In case these sums of money are paid, this does not imply that the Australian businesses get given advantages over other businesses such as those that involve the bribery of foreign public officials in Australia. In the current legislation, there are kinds of defenses against cases involving the facilitation of payment.

The problem of corruption in Australia whether internal or done by her citizens in foreign countries is a disgrace to Australian businesses and has a diverse effect on the government and her relationships with the foreign nations. In the present bribery code, the Australian citizens and the companies that are involved in corruption can be prosecuted using the Australian law or under the law of foreign countries².

It needs to be clear that bribing and other forms of corruption by a foreign public official is a crime that needs to be addressed by the Attorney General in the right manner as it has been on the increase in Australia. Even though any form of corruption might be tolerable by the official, or a given situation requires a given token that can be seen as customary, it is unethical under Australian law to be involved in bribery.

The Australian legislation body should be made to understand that making certain changes to the domestic bribery laws, removing the facilitation payments defense from their bribery provisions, and making various changes to the payment policy would not be a solution and the real problem of foreign corruption needs to be addressed by all the stakeholders. Making the companies internalize the regulations than enforcing them is more beneficial. All the stakeholders should be aware that corruption not only undermines the issue of competition by the Australian companies, but it moreover inhibits the business growth and affects the international market for the Australian export and her investment. The attorney general’s office needs to make sure that everything is in order in case of any attempt by the foreign officials to bribe³.

The offense of Bribing a Foreign Public Official

According to section 70.2 of the Commonwealth Criminal Code, one is referred to as having done an offense if they act in a way that benefits another person. Moreover, they are guilty if they promise to provide a benefit to another person or make a benefit that is to be given to another person. These actions are meant to influence a foreign public official to act in a way that benefits the business of the giver of the offer. The person charged needs to be an Australian citizen or a company that is Australian by origin and it should be incorporated under the Commonwealth law.

However, in most jurisdictions, it is difficult to find an individual or a company that has committed this offense since it is common to pay a given amount to have some services such as water connection to a government official; thus the rise of the “facilitation payments”. For example, the case that involved the payment of the Australian Wheat Board to Iraq to allow the sale of the Australian wheat was found not illegal. These cases were argued that since payment of such sums was not illegal under the Iraq law meant that it was not a bribe in Australian law. Sometimes these defense laws are there to protect the business and her abolishment would be a problem for the Australian business as the government thinks it is a form of corruption⁴.

Facilitation Payment Defense

Even though these are small payments for services to individuals, companies are of more concern to most jurisdictions. It is not easy to prosecute an individual or a company when found to have committed the crime of giving a facilitation payment under Australian law. Most employees rarely record these kinds of transactions in their books. However, the defense against these kinds of payments is that they need not affect the economy negatively. These kinds of payments do not create a competitive advantage over other individuals who do not pay the facilitation payments and therefore the ban on facilitation payments is illegal and with no practical benefit.

Therefore, this kind of move by the Australian government is likely to affect the business and the country’s investors. The abolishment of the defense of facilitation payments would be more disadvantageous to the Australian business as it brings an inconsistence to the commitment that the Australian government has put in place more so to the Asia-Pacific region. Section 70.4 of the Commonwealth Code states clearly that one who is defending themselves by giving the facilitation payment is given an exemption if the benefit of the value paid is smaller; if the amount paid was in getting the common services by the foreign public official and a record of the benefit was made after the service was given.

The Australian government, therefore, is not justified on what grounds they are to remove the facilitation payment. Since these payments differ from country to country, the facilitation payment that is considered small in the US might be a substantially big amount for example in Japan. Therefore, this move would put most of the companies in Australia at a big risk of doing business outside the law of the Commonwealth which they are to abide by. Instead of the Australian government removing the facilitation payment, it should consider the following ideas which seem more important to all the businesses within the country and those investments in foreign countries. Further, it would ensure that the Australian business operates within section 70.4 of the Commonwealth code of ethics that all businesses are to abide by⁵.

Review of Current Enforcement Procedures

In the past few years, foreign regulators have been involved in enforcing laws that are aimed at reducing the level of corruption. Since the issue is becoming a problem with most of the world states that have investments both locally and abroad, more resources have been devoted to the same. Countries are losing a lot due to foreign corruption and the Australian government should not be left behind in fighting this pandemic. The attorney general’s office needs to make sure that the required procedures are put in place so that all the companies and individuals that are involved in the corruption deals receive severe penalties and that the regulations and procedures are effective. Coming up with various fraud offices whose major task would be to look at foreign companies that disadvantage the Australian companies through illegal payments would help⁶.

Although the laws to curb those people and companies that went against the Australian Criminal Code were put in place, the big question remains on why the Australian government has seen no drop in foreign bribery crimes. It is down to the law enforcers that the level of enforcement of the bribery laws in Australia is low compared to other jurisdictions in the world. Transparency International previously ranked Australia among the last countries regarding the enforcement of laws. Therefore, having severe penalties about the situation is of no use. With the new regulation that requires enforcement, the level of local and foreign corruption is likely to be minimal⁷.

Putting Everything in Order

Most of the Australian companies and individuals are involved in corruption and this has affected the country’s economy severely. Thus, it would be important to put everything in the right order to avoid the corruption problem when it has been identified. This is because the process of doing investigations is a tedious exercise as they consume time and a lot of the resources and it is better to “prevent than cure”.

Laws can always be broken, and in law, there is a need for much evidence before prosecuting the concerned parties. Having to teach people about the importance of observing moral ethics in business is vital to the solutions of foreign corruption. Therefore, there is a need to minimize the chances of bribery happening in the first place. According to a recent study, most of the Australian organizations are not known by most of the foreign anti-corruption legislation.

The need for Australian organizations to be exposed to foreign anti-corruption bodies is vital to avoid bribery in overseas companies. The corporate executives that are involved in the management of risks and their counselors need to make sure that more time and resources are put in place to address the corruption risk and that the risks are managed. Thus, having the right strategies in place would be advantageous when other regulations in the foreign countries are in place. Thus, the Attorney General’s office should come up with the following strategies as a measure against foreign bribery⁸.

Coming up with an Awareness Program

Having a training and awareness program ensures that all the company employees, the customers, supplies, and the stakeholders know of the regulations and procedures that a given company has put in place regarding fighting foreign and “domestic” corruption. This training in the companies should focus on people in senior management positions as they are many times the ones involved in the corruption allegations⁹.

Analysis of Various Organizational Data

Most of the data held by organizations may be an indication of the culture concerning the organization. The culture would include how the given company conducts its business with foreign companies and other transactions within the organizations. Thus, having a given body that analyzes this data identifies any inappropriate behavior in an organization. The internal data in a company gives clues about the suppliers that the given company is involved with, the customer details, the banking transactions invoices, the employee bank account details, corporate credit card transactions, and the phone records.

However, in some other cases that are expected to have a high risk of corruption, other external information might be important to determine if the company is involved in foreign bribery. Some of the external data would include the data on the company’s director and shareholder records, the property owner, the court records, the media search information of the company, the government sanctions list, and other social networking sites. The combination of this data and the external data can be analyzed to determine how the given company conducts its business and, whether any illegal behavior is discovered in all the information is analyzed¹⁰.

Having a Register in Place to Monitor Transactions

The Attorney General’s department should have a system in place that tracks the procedures and the specific transactions that a given company is involved in. All the Australian companies and individuals both within the country and overseas should subscribe to this system and all their details taken down and stored in the system database¹¹. However, there needs to be a database for high-risk profile companies and individuals developed from the analyzed data so that preventive measures should be taken. These tips enable well-experienced staff to do their investigations and submit their report to the department commission for further action on the issue.

Conclusion

Therefore, regarding the Australian law and in my own opinion, I believe that the issue of the abolishment of the facilitation payment is not justified but if the Attorney General is viewing the issue as the main cause of corruption, then the above recommendations should be in a position to be served better through proper implementation by the government. Facilitation payments are common to any citizen in any state and thus it is the right of individuals to defend themselves in court. The removal of the payment and its defense would affect the Australian business and the companies in overseas countries thus giving other countries an edge over Australia in terms of business.

Bibliography

Australia: Phase 2 (2006) Organization for Economic Co-operation and Development Directorate for Financial and Enterprise Affairs. Web.

Criminal Code (Cth) s 70.2(1) (a) (i).

Christopher K. Carlberg, ‘A Truly Level Playing Field for International Business: Improving the Convention on Combating Bribery Using Clear Standards’ (2003) Boston College International & Comparative Law Review 95, 97.

Eduardo Wiesner, Mancur Olson Jr. & Peter Eigen, ‘Transaction cost economics and public sector in developing countries: toward a theory of government failure’ in World Bank’s Evaluation & Development: The Institutional Dimension (1998) 108.

Just how business is done? A review of Australian business’ approach to bribery and Corruption (2006) Centre for Australian Ethical Research Rebecca Koch.

The Foreign Corrupt Practices Act: It’s Time to Cut Back the Grease and Add Some Guidance’ (2005). Boston College International and Comparative Law Review 379, 401.

See Attachment, Strategies to Combat International Financial Crime.

See Attachment, Insider Trading.

See Attachment, Investment Frauds.

Terence Cole. The Commissioner in the Australian Wheat Board Inquiry ‘Corruption’ (Address to the 6th National Investigations Symposium) (2006). Web.

Transparency International Bribe Payer’s Index 2002 (2002) Transparency International. Web.

Footnotes

Transparency International Bribe Payer’s Index 2002 (2002) Transparency International.
Terence Cole. The Commissioner in the Australian Wheat Board Inquiry ‘Corruption’.
See Attachment, Investment Frauds.
See Attachment, Insider Trading.
See Attachment, Strategies to Combat International Financial Crime.
Rebecca Koch, ‘The Foreign Corrupt Practices Act: It’s Time to Cut Back the Grease and Add Some Guidance’ (2005).
Just how business is done? A review of Australian business’ approach to bribery and Corruption (2006) Centre for Australian Ethical Research
Christopher K. Carlberg, ‘A Truly Level Playing Field for International Business: Improving the Convention on Combating Bribery Using Clear Standards’.
Eduardo Wiesner, Mancur Olson Jr. & Peter Eigen, ‘Transaction cost economics and public sector in developing countries: toward a theory of government failure’ in World Bank’s Evaluation & Development
Criminal Code (Cth) s 70.2(1) (a) (i).
Australia: Phase 2 (2006) Organization for Economic Co-operation and Development Directorate for Financial and Enterprise Affairs.

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