Miners BHP Billiton, Woodside, Orica warn investments at risk from proposed foreign bribery laws

Asia Pacific
Rule of Law

Miners BHP Billiton, Woodside, Orica warn investments at risk from proposed foreign bribery laws


Mining giants BHP Billiton, Woodside and Orica have warned the federal government against going too far in strengthening Australia's foreign bribery laws, saying it could put local companies at risk and prevent them from taking up new investments overseas.

In submissions as part of proposed federal reforms to boost local foreign bribery laws, the miners argue that Australia would be more successful at hunting bribery crime if it allowed Australian companies under investigation to cut deals with federal police in order to avoid criminal prosecution.

Other countries, including the US and UK, allow what's known as a Deferred Prosecution Agreement (DPA). By this scheme a company charged with foreign bribery offences willingly admits to a crime – as well as paying a fine and making changes to ensure it doesn't happen again – and can avoid prosecution.

The government's proposed reforms, announced by Justice Minister Michael Keenan earlier this year, open up consideration of such a scheme being adopted in Australia, but also propose toughening definitions to catch people involved in foreign bribery.

The reforms come amid the AFP investigation into Rio Tinto's Simandou payments. It also follows long-running AFP foreign bribery investigations into companies including BHP Billiton, Leighton Holdings, now known as CIMIC, and Tenix.

BHP Billiton said in its submission "greater consistency will help align compliance standards regardless of a company's home jurisdiction and will ultimately assist in the fight against corruption".

The company negotiated a US settlement after being fined $US25 million for breaching the Foreign Corrupt Practices Act in relation to its 2008 Beijing Olympics hospitality for foreign officials.

While the US Securities Exchange Commission (SEC) a made no finding of bribery or corruption, it found the company did not have appropriate internal controls over the program which involved Asian and African officials being given business class airfares, accommodation and entertainment.

"Foreign bribery offences typically arise in complex circumstances," BHP said in its submission. "We agree that regulators need a variety of enforcement options in order to respond in a way that reflects the relative gravity of the conduct."

Woodside's submission by senior vice president corporate and legal Michael Abbott urged the government not to get out-of-sync with OECD other countries including the US and UK.  

While Woodside agreed tough foreign bribery laws were needed, it was worried that the creation of a new offence of "recklessness" would "create significant uncertainty for responsible Australian companies investing in foreign countries with higher levels of foreign bribery and corruption risk".  

"Such companies may feel compelled to decline legitimate investment opportunities out of concern that if a foreign public official was indirectly and unintentionally to receive an improper benefit from the company, then the company could still face criminal liability based on an allegation that it had ... taken an unjustified risk," Mr Abbott said.

Orica also warned the government against going too far, saying "if law and policy settings cause ethical companies to withdraw from challenging markets, this can leave those markets open to others who do not share our commitment to ethical business conduct. This can increase overall levels of corruption to the detriment of communities in developing countries."

Orica said having a DPA scheme, in line with other countries, would "facilitate the resolution of multi-jurisdictional investigations and to avoid creating unusual disincentives for Australian companies".

"For example, while the UK DPA scheme requires companies to admit detailed underlying facts, it does not require an express admission of criminal liability, which can lead to collateral consequences such as breach of banking covenants and debarment from contracting with certain governments and multilateral development banks," Orica said.

Transparency International Australia warned the government that if it were to set up a DPA scheme, "it will only be an effective tool in combating bribery and corruption if it is part of a package of reform measures, and not viewed as a 'get- out-of-jail free' card by offending corporates". It said tougher foreign bribery laws also needed to be coupled with stronger whistleblower protections.

Uniting Church Australia's Mark Zirnsak said he "strongly supports that it be criminal to pay bribes to third parties in order to win government contracts in foreign jurisdictions".


Source: Sydney Morning Herald; Written by: Nassim Khadem