Client Update: Anti-corruption reforms: a view from the B20 Australia
25 July 2014
In brief: Anti-corruption was high on the agenda at the B20 Australia summit recently held in Sydney. Allens Partner Rachel Nicolson (view CV), a director of the UN Global Compact Network Australia and convenor of its Anti-Corruption Leadership Group, attended the summit and provides an overview of the issues discussed.
On current estimates, corruption accounts for more than three trillion dollars lost to the global economy and 5 per cent of global GDP. There is no question that corruption is a serious challenge to economic growth and development. It increases business costs, impacts on investment and trade and undermines the rule of law. It also perpetuates poverty.
The B20 Australia Summit was held in Sydney on 16-18 July and anti-corruption was a hot topic. The Summit, which brought together around 400 global CEOs and business leaders, discussed the policy recommendations of the B20 in advance of the G20 Leaders Summit in November.
This year, the B20 took the smart step of embedding its anti-corruption work into each of its policy taskforces. As a result, the B20's anti-corruption recommendations are tailored effectively to the issues of most concern to the global business community.
The 'Financing Growth' taskforce was led by Mike Smith, CEO of ANZ Banking Group. It considered how issues such as the availability of credit to business, the stability of financial institutions and the nature of financing regulation can be used to maximise, rather than impede, economic growth. Its anti-corruption recommendations included the harmonising of anti-corruption and anti-money laundering laws globally, in particular to increase transparency of ownership and control of companies.
This would be a significant legislative development across many jurisdictions globally, with the complexity and geographic reach of corporate structures often misunderstood, or unaccounted for, by financial crime laws. This proposed reform has the potential to increase the capacity of states to track financial crime significantly.
The 'Trade' taskforce, led by Andrew Mackenzie, CEO of BHP Billiton, identified the need to maximise trade through implementation of the Bali Package Agreement on Trade Facilitation and winding back protections triggered by the global financial crisis, for instance non-tariff barriers. Acknowledging that corruption remains a significant barrier to trade, particularly where border and customs facilities are involved, it recommended that G20 governments prioritise transparency of customs fees, charges and regulations, and also implement a one-stop and automated customs procedure.
It is clear that such reforms, though no doubt difficult to achieve, would substantially assist in the conduct of everyday business, particularly in higher-risk jurisdictions, by removing an area of ongoing bribery risk faced by these companies. It also has the potential to significantly decrease business costs, with many companies leaving goods at the border or doing without necessary staff or consultants for extended periods of time, rather than submitting to paying bribes.
This taskforce also recommended that all new trade agreements include specific anti-corruption clauses. Such clauses are already present in many investment treaties and trade agreements; however, a more uniform approach to this issue would assist in increasing state accountability on meeting their anti-corruption obligations imposed by instruments such as the OECD Convention Against Foreign Bribery or UN Convention Against Corruption.
The 'Human Capital' taskforce, led by Steve Sargent, President and CEO of GE Mining, focused on maximising the job creation potential of the private and public sectors, improving alignment of people, skills, jobs and locations, and increasing organisation and workforce adaptability. Its anti-corruption recommendations focused on the supply and demand sides of corruption, by proposing the harmonisation of anti-corruption laws that encourage companies to build best practice compliance programs, and regulatory reform to recognise corporate anti-corruption programs and self-reporting.
This reform is desperately needed, and would no doubt be welcomed broadly by the business community, which currently faces the uncertainties that result from often vastly different regulatory responses to self-reporting. This uncertainty is compounded by the majority of regulatory regimes failing to expressly acknowledge the role that robust anti-corruption compliance programs should play when decisions are made by regulators or courts on the attribution of liability to a business for the conduct of persons associated with it.
Infrastructure and investment
The 'Infrastructure and Investment' taskforce, led by David Thodey, CEO of Telstra, focused on the common challenges of urban population growth, ageing infrastructure, the lack of bankable projects and barriers to financing infrastructure. The related anti-corruption recommendations included G20 governments instituting best practice anti-corruption measures in public procurement processes for major infrastructure projects, including by incentivising bidding companies to have best practice anti-corruption compliance programs, for instance through positive recognition in bidding processes. To further attract foreign investment, development of a non-binding international model investment treaty that imposes anti-corruption obligations on states was proposed. Again, these are sensible and straight-forward reforms that would make a tangible contribution to progressing the global infrastructure agenda.
In addition to those taskforce-specific recommendations, the B20 recommended the institution of national high-level reporting mechanisms for actual or suspected instances of bribery. While history shows it is often difficult to establish an effective, independent mechanism of this nature, particularly in jurisdictions where the rule of law or governance is weak, such a mechanism is an essential aspect of a state's anti-bribery armoury.
Following the B20 Australia Summit, the B20 will resume its dialogue with G20 policy makers to identify how to implement these B20 recommendations.
There is no question that the significant influence of the international business community that can be brought to bear through the B20 process has the potential to inform global, regional and national developments on anti-corruption. To the extent that these developments align with the anti-corruption recommendations made by the B20, they would be welcome indeed.
Rachel Nicolson is a Partner at law firm Allens (in alliance with Linklaters) and heads its anti-corruption practice. Rachel attended the B20 Australia Summit in her capacity as Director of the UN Global Compact Network Australia and convenor of its Anti-Corruption Leadership Group.
Launched in July 2000, the UN Global Compact is a leadership platform for the development, implementation and disclosure of responsible and sustainable corporate policies and practices. Endorsed by Chief Executives, it seeks to align business operations and strategies everywhere with 10 universally accepted principles in the area of human rights, labour, the environment and anti-corruption.
- Rachel NicolsonPartner,
Ph: +61 3 9613 8300
- Ross DrinnanPartner, Practice Leader, Disputes & Investigations,
Ph: +61 2 9230 4931
- Peter HaigPartner,
Ph: +61 3 9613 8289
- Ben ZillmannPartner,
Ph: +61 7 3334 3538
- Vincent BullConsultant,
Ph: +67 5 305 6000
You can leave a comment on this publication below. Please note, we are not able to provide specific legal advice in this forum. If you would like advice relating to this topic, contact one of the authors directly. Please do not include links to websites or your comment may not be published.