Australia: The dangers of overstating your company’s anti-corruption stance
Australia enjoys a reputation as one of the world’s least corrupt nations. Transparency International’s 2022 Corruption Perceptions Index ranked Australia 13th of 180 countries with a score of 75/100. However, this score is a noticeable decline from the country’s 2012 score of 79/100 (and rank of seventh).
Understanding appears to be growing that Australia needs to pay closer attention to its anti-corruption and integrity framework, and the federal government is taking action.
The regulatory and reputational risks that confront organisations that fail to implement anti-corruption and anti-bribery measures are increasingly significant. This is especially true for organisations that tout their steadfast commitment to anti-corruption and anti-bribery measures yet fail to take the necessary steps to uphold this commitment.
Australia’s renewed focus on anti-bribery and corruption
Responsive to the increasing public attention towards corrupt conduct in Australia, federal agencies such as the Australian Federal Police (AFP) have demonstrated increased determination to investigate, prosecute, and confiscate the assets of those Australians who engage in corrupt conduct.
One notable example from May 2023 entailed a settlement between the AFP and an Australian company in which, reportedly, the AFP confiscated at least AUD9.3 million in benefits derived from alleged bribery. Criminal prosecutions were not commenced on that occasion because the company demonstrated a high level of cooperation and self-reported the alleged bribery.
Compounding the regulatory risk for organisations, the federal government has sought to implement a more robust anti-bribery and corruption framework. In particular, the federal government recently established the National Anti-Corruption Commission (NACC), which commenced its work on July 1, 2023.
The federal government is signalling its intent to crack down on corrupt conduct by granting the NACC broad investigatory powers, including oversight of contracted Commonwealth service providers and their officers and employees. This means that when private sector companies, directors, officers, and employees do something that might cause a Commonwealth public official to carry out their official role other than honestly or impartially, they may be investigated by the NACC.
In another significant move, the Crimes Legislation Amendment (Combatting Foreign Bribery) Bill 2023 has been tabled before Australian Parliament. This Bill introduces a new indictable corporate offence of failing to prevent foreign bribery.
The dangers of misrepresenting compliance
Given such tightened social and political scrutiny, it has become commonplace for organisations to publicly state their zero-tolerance policy on corrupt conduct. These zero tolerance policy statements may be made through corporate policies, contractual clauses, corporate reporting, media comments, logos, social media posts, or marketing materials.
However, Australian regulators are signalling that an organisation’s statements with regard to its anti-corruption measures must be a genuine reflection of the organisation’s practices.
The Australian Competition & Consumer Commission (ACCC) and the Australian Securities and Investment Commission (ASIC) have demonstrated an increased focus on investigating and bringing claims against misleading claims on environmental, social and governance (ESG) issues. In 2023, ASIC commenced two civil proceedings against separate superannuation entities for allegedly making misleading statements about the sustainable nature of superannuation investment options.
Greenwashing has been a particular focus of the regulators. From July 1, 2022 to March 31, 2023, ASIC issued 11 infringement notices addressing greenwashing actions. Separately, the ACCC has been referred to investigate alleged greenwashing by an airline company. Through an Internet sweep of 247 business websites, the ACCC has also commenced additional investigations of alleged greenwashing. The Internet sweep allowed the ACCC to identify eight corporate behaviours (in the context of environmental claims) which could constitute greenwashing.
Of the eight issues identified, six issues may be seen to apply to the misrepresentation of anti-corruption measures. These are:
- making vague and unqualified claims
- lacking substantiating information
- use of absolute claims
- omitting relevant information
- misleading uses of third-party certifications and
- misleading uses of images which appear to be trustmarks.
Like greenwashing, the wrongdoing associated with making false representations about internal anti-corruption measures may constitute consumer misinformation and poor governance. Given the similarities, it is not a stretch to see that a next wave of regulatory activity will be in monitoring whether organisations can substantiate their publicly expounded anti-corruption and anti-bribery stance.
With the existing whistleblower protection regime and further calls for additional protection for whistleblowers, there is also an increased risk of misleading practices and corrupt conduct being exposed by employees or contractors for public scrutiny. With societal awareness of corporate conduct, and greater scrutiny of ESG issues, it is critical for organisations to manage their exposure to these risks.
Key takeaways
Given the broadening legal framework enabling the investigation and exposure of poor anti-corruption measures, it is important to proactively review and apply anti-corruption measures. This would require understanding Australia’s anti-bribery and corruption framework, reviewing your anti-bribery and anti-corruption policies, and, most importantly, ensuring proper implementation so that your employees and third-party business partners comply with these policies.
At heart, where organisations have made public representations, including through public reporting obligations, it is important that these representations are an accurate reflection of the organisational practices and culture.
Learn more about the implications of these developments and about Australia’s moves to strengthen its anti-corruption activity by contacting Natalie Caton and Gowri Kangeson.
