1. How would you characterize the risk of corruption in Australia?
Australia is considered a low-risk country for corruption. In the TRACE Matrix, which measures business bribery risk, Australia is ranked 29th out of 197 countries – reflecting a low level of interaction with the government for companies wishing to do business there and good civil-society oversight by third parties, such as the media and press.
Although Australia is politically stable and has a very comprehensive and effective legal system, corruption does occur. According to the TRACE Matrix, Australia has only moderate enforcement of anti-bribery laws and moderate quality of government transparency, which increase the risk of bribery.
In recent years, some Australian politicians have run afoul of political donation laws. Additionally, there is no “revolving door” law in Australia governing the employment of former politicians, who often become highly paid consultants after serving in public office – creating the potential for conflicts of interest.
There have been a number of scandals involving approvals for planning and development projects at the local government level. In the private sector, many procurement projects pose an increased risk of corruption, as companies may pay a bribe or offer a kickback in order to win a high-paying contract.
2. How do existing corruption risks affect foreign businesses?
Corruption is not considered to be an obstacle to foreign companies investing and operating in Australia. Although the risk of corruption is low, Canadian companies doing business in Australia – especially those operating in the construction and infrastructure sectors. (See Question 3 for more detail) – should be prepared to face certain risks. These may come in the form of requests for union or political donations or demands for bribes to obtain permits and licenses. Canadian companies that participate in public contracting may be exposed to corruption when bidding for projects.
One challenge for foreign businesses operating in Australia is simply not knowing what constitutes normal practice for payments and transactions. To address this, companies may wish to consult TRACE’s Country Bulletin for Australia, prepared by a TRACE Partner Law Firm, or to coordinate with local counsel to make sure they understand local laws and regulations.
3. What are some specific risks in the construction and infrastructure sectors?
Sectors with high-value contracts, such as construction and infrastructure, present an increased risk of corruption compared to other business sectors in Australia. In particular, union officials have exploited construction companies, which are eager to avoid delay and liquidated damages on their projects. Bribes in this sector have taken all sorts of forms – from the conventional “cash in paper bags” to the more creative use of false invoices, wage claims, training funds and charities. One large Australian development company even obscured the building of a luxury home for a union official, by having its sub-contractors submit false variations. Oil and gas (especially maritime projects) and offshore construction are similarly vulnerable to union bribe demands.
4. What steps can foreign companies take to reduce their risks and exposure to corrupt business practices?
To reduce corruption risks, foreign companies should ensure they understand the local regulatory framework and business practices. Australia does not require the use of local agents by foreign companies, which means companies have broad discretion in selecting which third parties to engage. Companies may choose to work with TRACE Certified companies, which have completed a rigorous due- diligence process based on international standards – including training and continuous daily screening against international sanctions and enforcement lists.
5. What anti-bribery compliance support is available in this market?
Members of TRACE doing business in Australia should review the Australia Country Bulletin and Gifts and Hospitality Guideline prepared by a local TRACE Partner Law Firm and available on the TRACE Member Resource Center – to better understand local laws and regulations governing retention of commercial intermediaries in Australia, as well as local monetary thresholds for providing anything of value to Australian government officials.
To vet potential third parties, companies may wish to search public records, such as corporate registrations, that are available on the Australian Business Register (ABR) and the Australian Securities and Investments Commission (ASIC) Registers. TRACE also recently launched TRACEpublic, the first global register of beneficial ownership information, which allows companies to share and search for beneficial ownership information at no cost. The database supports the efforts of companies seeking to conduct business ethically.
The Australian Trade Commission, or Austrade, publishes an Investor Guide for foreign investors and businesses interested in operating in the country. Additionally, companies may refer to the Australian Public Service Code of Conduct for guidance on the giving and receiving of gifts with respect to federal government officials.