The lessons from the AWB saga are still being felt by the directors and offi cers the subject of ASIC’s civil penalty prosecution. Whether or not a criminal prosecution for foreign bribery emerges against a corporation or an individual, any improper conduct opens up directors and offi cers to potential civil liability for breach of their duties.


There is real and concrete value in sustained education and compliance training, and documenting that internal training, to protect the corporation when the investigators arrive. While the creation of numerous corporate documents can of itself be a headache, their existence can provide a valuable defence to a cynical investigator who asks, some years after the event, “why did you do this?” and “what did you tell your staff ?”. You only get small comfort from your insurance cover, particularly when the risk of criminality hangs over the policy like a Damocles sword and the insurer is more interested in denying or withholding a grant of indemnity than accepting liability. The position adopted by the US Department of Justice and the UK Serious Fraud Offi ce is increasingly one of encouraging corporations to self report potential foreign bribery off ences as the risk is all the more if there is no self report and the corporation decides to tough it out.


It is not just directors, offi cers and a corporation that may face liability for corrupt conduct. The UK case of Mabey& Johnson illustrates that a shareholder can be forced to pay back the value of dividends (over £130,000) received as a result of profi ts generated from bridge building contracts in Iraq secured by corrupt conduct. The Australian proceeds of crime legislation can apply not just to the traditional drug trade criminals, but to corporations and shareholders who have derived a profi t from the criminal conduct of foreign bribery.


Foreign bribery is but one more and an increasingly important, facet of the criminal law that directors and senior executives must be alive to. Where a corporation conducts business in “high risk” countries, you must know what you are doing, who you are dealing with and if you


39


“Australian courts are starting to refl ect what their US counterparts have been doing for some time – treating white collar or economic crime with increasing seriousness, with imprisonment as the probable consequence.”


are using agents, third parties, consultants or intermediaries, what do you know about them? If you cannot answer questions on the fundamental relationship issues, you are at risk.


No longer are foreign governments, and in particular in the Asia Pacifi c region, standing aloof from the increasing pressure in the global community to stamp out corruption for the benefi t of all. Countries as diverse as China, Japan, Korea and Cambodia have laws not dissimilar to Australia, and prosecutions are starting to emerge.


It is of critical importance to directors and management of Australian companies which engage in any commercial activities outside Australia to:


• be aware of these developments;


• understand the laws and the impact of those laws on their business operations; and


• proactively engage in an education and compliance regime which can protect both the company and individual offi cers of the company from civil and/or criminal prosecution and ultimately, imprisonment.


Conclusions I close with two thoughts.


First, Commissioner Cole in opening his Report into AWB, pondered why AWB had acted as it had done. He concluded that it did so because of a “closed culture of superiority and impregnability, of dominance and self-importance”. He observed that no one asked one very simple question – what is the right thing to do?


Second, in the late 1500s, a famous author spun a story of love, revenge, death and loss and during a poignant moment upon the death of a Moorish Prince, his nemesis cries out from the palace balcony:


Reputation, reputation, reputation!


O, I have lost my reputation!


I have lost the immortal part of myself, and what remains is bestial.


Companies and individuals contemplating corrupt conduct with foreign offi cials for short term gain might do well to refl ect on their reputation, hard won and easily lost.


A full version of Rob Wyld’s paper, delivered at the University of Tasmania Law School in August 2012, may be requested from robert.wyld@ jws.com.au.


A legislative overview of the Australian, US and UK laws on foreign bribery and corruption, prepared by the Institute of Chartered Accounts in Australia may be accessed from<www. charteredaccountants.com.au>.


MAR–MAY 2012


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